How COVID is affecting even healthy Seniors…

This month in Crisis Corner, I want to discuss the COVID deaths that most people do not hear about. I am not talking about deaths caused, directly, by someone contracting COVID but rather the deaths caused by the unbearable isolation that so many seniors are facing in care facilities.

Early in the pandemic most care facilities stopped allowing any visitors to the residents, though a few made exceptions for spouses or allowed outdoor or “through the window screen” visits. Within two months of these lockdowns I started noticing an increase in the number of Probates being handled by the firm. Only one of those new Probates involved someone who died of COVID related illness, but many of them were people who lived in nursing homes or assisted living facilities and who were no longer allowed to see their loved ones.

I have no definitive proof that the two things are related. I am not a trained psychologist or statistician. I am a person who has spent a lot of time visiting clients in care facilities over the years. I know how important visits from friends and family can be. I even had a few clients who were excited to see me, which says a lot about how lonely these facilities can be. I absolutely believe that many of my new Probate work was caused by residents of these facilities who simply gave up the will to go on when they lost their connection to loved ones.

On September 17, 2020, the CMS (Centers for Medicare and Medicaid Services) issued new instructions to nursing homes that encourage resuming visitation of some kind. The statement echoes my own thoughts when it states:

While CMS guidance has focused on protecting nursing home residents from COVID-19, we recognize that physical separation from family and other loved ones has taken a physical and emotional toll on residents. Residents may feel socially isolated, leading to increased risk for depression, anxiety, and other expressions of distress. Residents living with cognitive impairment or other disabilities may find visitor restrictions and other ongoing changes related to COVID-19 confusing or upsetting. CMS understands that nursing home residents derive value from the physical, emotional, and spiritual support they receive through visitation from family and friends.

If you have a friend or family member who is living in a nursing home or other care facility and you have not been able to have contact with them for months on end, I encourage you to read the CMS instructions; call the facility and find out how they are changing their policies in light of the instructions; and find a way to visit your loved ones. Even if you cannot do a live visit for one reason or another: convince the staff to facilitate a video chat visitation; make phone calls; send letters with new photos; stand outside of windows and wave; just be present for your loved one.

I love to stay busy and have work to do, but not because this virus has caused even more far reaching devastation that what it is already given credit for. In this instance I implore you to do all that you can to ensure that you do not become my next client because of this pandemic.

How Much Do You Know About Social Security? Check Out These Seven Surprising Statistics – Plus Some Related Advice from Rajiv

Social Security may be the biggest, most important, and least understood government program in America. If you consider the sheer amount of money the program spends and the huge number of Americans who rely on the program for all or part of their livelihood, you’d think we would all have a solid working knowledge of how Social Security actually works.

Social Security is Vital to Millions, Yet Widely Misunderstood

Yet that’s not the case. We just read this interesting article about Social Security on the Motley Fool financial website. “When MassMutual recently surveyed 1,500 people 55 to 65 on their knowledge of Social Security,” the article begins, “more than half failed or barely passed.” The Fool calls that “a jaw-dropping figure,” especially when you take into account how essential Social Security is to most beneficiaries. (If you want to take the 10-question MassMutual quiz for yourself, click here.)

We want to share a few of these Social Security facts and figures from the Motley Fool article with you, but before we do, we think it’s important to get some perspective from Life Point Laws’ Rajiv Nagaich. As always, Rajiv looks behind the numbers and sees some broader implications.

Social Security Bound to be Affected by “Unprecedented Times,” Says Rajiv

“There’s an untold story here,” he states. “We’re in the midst of unprecedented times – people are waiting for stimulus checks related to the coronavirus, and millions are facing layoffs. That combination paints a really bad picture for Social Security.” According to Rajiv, people being laid off means smaller contributions into the Social Security system, while at the same time increasing numbers of workers may start taking benefits prematurely to help bridge the unemployment income gap. All of this is happening against the backdrop of a ballooning federal deficit.

Rajiv suggests now is the time to be especially proactive. “Before you leap to the solution of tapping Social Security early, you need some comprehensive advice,” he says. “If you can start planning now to work longer, that’s a good strategy. Look for ways to cut expenses, and talk to your family about the potential of multi-generational living where you can combine household incomes.  As soon as possible, get a financial dashboard in place so you have the ability to evaluate and adjust your circumstances.” And, he adds, you can still attend a LifePlanning webinar from the comfort of your own home. Read on and we’ll tell you more.

How Much Do You Know About Social Security? Seven Surprising Stats

Here are some numbers compiled by MotleyFool that dramatize just how massive Social Security is and how essential to the fabric of American life.

  • $1 trillion: Social Security pays out roughly $1 trillion annually to approximately 68 million Americans (as of 2018). Since the entire U.S. GDP is about $21.5 trillion, Social Security alone represents around 5 percent.
  • 22 million: That’s the number of Americans Social Security is keeping out of poverty, according to the Center on Budget and Policy Priorities. “That doesn’t mean it’s giving them a comfortable, middle-class existence,” the article reminds us. The federal poverty level for singles is just $12,760 annual income – roughly $17,240 for couples.
  • 8 percent: Even with the good news of those kept out of poverty by Social Security, the bad news is that nearly 9 percent of recipients are living below the poverty line even with Social Security income. “Another 5 percent were ‘near poor,’ meaning their income was between 100 percent and 125 percent of the federal poverty level,” the article reports. “The [poverty] rates were significantly higher for single people and minorities.”
  • $1,507: The average Social Security benefit is about $18,000 per year, or $1,507 per month. That may come as a wake-up call to the people who may be over-estimating how much they’ll receive. The highest allowable benefit this year is $3,790 per month, or about $45,000 annually. Your benefit is a function of several factors including your year-by-year work history and the age at which you start taking benefits.
  • $1,627 vs. $1,297: That average benefit just cited doesn’t tell the whole story, says Motley Fool: there’s a major gender disparity. “Because women tend to earn less over their lives, due to income inequality and also because they often have to leave the workforce for some years to care for children or other family members,” women have a much lower average monthly benefit: $1,297 in 2018 compared with $1,627 for their male counterparts..
  • 24 percent: Most people know that the simplest way to boost Social Security income is to delay starting benefits. We can start collecting benefits as early as age 62 and as late as age 70, even though “full retirement age” is generally between 66 and 67. “For each year earlier than our full retirement age that we start, our benefits will shrink,” says MotleyFool. “And for each year beyond it that we delay, they’ll increase – by about 8 percent annually. So, delay from age 67 to 70 and you’ll enlarge those checks by about 24 percent.”
  • 77 percent: Many people fear that Social Security is going bankrupt and their benefits will disappear. “Social Security is facing some serious challenges ahead,” the article acknowledges, “but the recent worst-case scenario was that around 2035, in about 15 years, it wouldn’t have enough to pay retirees their full benefits – but it would have enough to pay them about 77 percent of those benefits.” A 23 percent haircut is an unhappy prospect but, as the article says, “it’s a whole lot better than zero.” We hope Congress and the President will one day get around to a legislative fix.

(originally reported at www.fool.com)

Beware of These Five Social Security Myths – They Could End Up Costing You Plenty

Here at Life Point Law we are constantly being reminded that there is a vast amount of misinformation out there about Social Security. This program, so important to senior Americans, is widely misunderstood – so much so that thousands of retirees are making decisions every year that can end up costing them a lot of money over the course of their retirement.

Correct These Social Security Myths and Clear Away the Retirement Fog

To help counter all the erroneous assumptions and bogus “facts” people cling to about Social Security, we are always on the lookout for articles for the AgingOptions blog that can help clear away the fog and provide reliable information. After all, our goal is to help men and women make the right decisions for their retirement so that they can protect their assets, avoid becoming a burden to their loved ones, and escape the trap of being forced against their will into a nursing home.

With that goal in mind, we want to bring back to your attention this helpful article that was published last year on the NerdWallet financial website. Written by frequent contributor Liz Weston, the column lists five common myths about Social Security and then sets the record straight about each one. These may not be “new news” to you, but if you have someone in your life who frequently spouts misinformation about Social Security, Liz Weston’s column may be a good place to refer them.

The Number of People Filing Early Shows the Power of Social Security Myths

The NerdWallet article starts with one of the leading indicators of Social Security misinformation: the age at which people file for monthly payments. “Researchers tell us that most people would be better off waiting to claim Social Security benefits,” writes Weston. “Yet most people file early.” Indeed, about one-third start taking benefits at the earliest allowable age, 62, even though they are permanently locking in a significantly lower monthly payment for the rest of their lives. According to the article, barely 4 percent of applicants hold out to receive maximum benefits at age 70.

Why do people grab their benefits at the first opportunity and leave so much money on the table? “Some people have little choice, of course,” Weston acknowledges. “They may have no savings and no job.” However, she adds, the irony is that many retirees “have better options than applying early, but don’t realize it. That’s due in part to the many, many myths surrounding Social Security.” As one example, Weston cites a 2013 financial survey in which more than three-fourths of pre-retirees said they felt confident about their Social Security knowledge – but when asked eight questions about how the program works, 95 percent answered at least some questions incorrectly.

Social Security Myths: People Don’t Understand the Benefits of Waiting

Here are Liz Weston’s five myths about Social Security – the ones, as she puts it, that are “most likely to cost you money.”

  • “It doesn’t matter when I take Social Security.” This is a surprisingly common misperception. “Social Security benefits increase by about 7 percent each year between 62 and your full retirement age, and by 8 percent each year between full retirement age and 70,” says Weston. While it may be tempting to start collecting early, “longer life expectancies, current low interest rates and rules regarding survivor benefits mean that most people are better off delaying.” It’s also generally true that many retirees outlive their savings, making it even more critical that they max out their Social Security benefits which will last a lifetime.
  • “If I have a shorter-than-average life expectancy, I should claim benefits early.” Research shows that most people underestimate their life expectancy. The Social Security Administration estimates that a 65-year-old man today can expect to live to 84, and a woman who is 65 today can expect to live to 86 ½. For couples who are 65 today, the odds are at least 50 percent that one spouse will live to 92. Weston adds, “Even if you’re right about having a shorter life expectancy, claiming early could shortchange your mate.” That’s because, when one spouse dies, “the survivor will get the larger of the two checks the couple was receiving.” If you’re the higher earner in your household, you’re ensuring your surviving spouse a larger benefit for his or her life if you delay.

Social Security Myths: People Worry About the Future

  • “If I claim benefits early and invest them, I’ll come out ahead.” This is a common fallacy. “No investment offers a guaranteed return as high as what you can get from delaying your Social Security application,” says Weston. “To match that return, you’d have to take a lot of risk. Even the most prudent investor can get shellacked by a bear market or real estate downturn.” Delaying Social Security offers a risk-free return.
  • “I have to claim Social Security as soon as I quit working.” You don’t have to start Social Security when you stop working, says Weston, and you don’t have to quit work to draw benefits. If you decide to retire but want to delay filing, your adviser may suggest other strategies to fund your retirement for a few years until you reach the optimum age.
  • “I need to apply before Social Security goes bankrupt.” We hear this a lot, but it’s a myth. “Social Security is not ‘going bankrupt,’” says Weston. It’s true that, if Congress doesn’t act, the system will have to reduce benefits by an estimated 20 percent in 2035, but “80 percent clearly is not the same as zero.” Odds are that Congress will get around to fixing Social Security, making adjustments that will probably affect future retirees and not current ones. Don’t lock in your benefit prematurely; if you do, says the NerdWallet article, “[it] just means settling for smaller checks for life.”

Millions of Future Retirees are Asking a Big Financial Question: Will Social Security Be Enough? Experts Say, “Probably Not.”

As Americans plan for retirement, one of the pillars of their financial plan is typically Social Security. Since the 1930s this program has been the social safety net ensuring that millions of retirees would not have to live in poverty but instead would have at least some level of steady income, adjusted for inflation. But as this article from Motley Fool warns, many approaching retirement are over-estimating how much “security” Social Security will provide, and their complacency could derail their dreams of a secure retirement.

Is Social Security Enough? You’ll Likely Need Other Sources of Retirement Income

In the article, reporter Christy Bieber writes, “Over one-third of current workers today believe Social Security will be a major source of income during retirement. Unfortunately, those who believe their primary income will come from this benefits program could be setting themselves up for financial disaster.” Her Motley Fool article cites a study from the National Institute on Retirement Security (NIRS) which found that those households where most of the income comes from Social Security are much more likely to be poor compared with those who have multiple sources of retirement income.

We took a look at the study which was done earlier in 2020, titled “Examining the Nest Egg: The Sources of Retirement Income for Older Americans.” It’s long, at 45 pages, and filled with data, but the authors’ thoughts on Social Security were clear. “Social Security has a very important and powerful role to play in preventing elder poverty,” they wrote, “but Social Security alone is not enough to provide a secure retirement, even though the largest share of older households only receive income from Social Security.”  In the view of these experts, one of the top policy priorities for helping retirees should be “protecting, strengthening, and expanding Social Security.”

Is Social Security Enough? A “Three-Legged” Income Stool is Far Better

The NIRS survey strongly cautioned against over-reliance on Social Security. “The findings of this report support the argument for a three-legged stool of retirement savings: the more sources of retirement income a household has, the more total retirement income they are likely to have.”  For the authors, the “three legs of the stool” are Social Security, a defined benefit pension plan, and income from individual savings. The Motley Fool article makes the same point: “If Social Security makes up the bulk of your income, you’re much more likely to not have enough,” Bieber writes.

In examining the NIRS study, Motley Fool determined that the degree to which a retiree is reliant on Social Security plays a significant role in how financially stressed someone turns to be. “While the vast majority of senior retirees get at least some income from Social Security,” the article points out, “there are striking differences between the percentages of income these benefits account for when comparing high- and low-income households.”

Is Social Security Enough? The Answer May Lie in How Much You Rely On It

Motley Fool compared retired men with incomes of $80,000 or more against men with incomes at the other end of the scale – under $20,000. For the average upper income man, roughly one-quarter of his income came from Social Security, versus nearly two-thirds for the retirees in low income households. The figures for women were similar, except that low-income women received an even higher percentage of their income from Social Security – 75 percent.

What about folks at other income levels? “For those in the middle,” the article explains, “there was still a clear correlation between relying more on Social Security and having a lower income.” The figures quoted by Motley Fool look like this:

  • Retirees with incomes of $60,000 to $79,999 relied on Social Security for between 40 and 42 percent of their retirement funds;
  • Those in the $40,000 to $59,999 income bracket counted on Social Security for 54 to 57 percent of household income;
  • Retired people with incomes of $20,000 to $39,999 got roughly 70 percent of household income from Social Security.

Is Social Security Enough? There May Be More to the Answer

The Motley Fool article mentions that, with the average Social Security benefit in 2020 at barely over $1,500, it’s no surprise that over-reliance on this program can leave retirees in the lurch. “Even for those who get more than the average, Social Security benefits are only designed to replace around 40 percent of pre-retirement income. They simply aren’t designed to provide you with enough to live a comfortable life in your later years without additional funds.” The piece concludes with the traditional prescription: save more, start planning earlier, and (we would add) look for ways to generate income with part-time work or other gigs.

But another tool at the disposal of future retirees is to delay taking Social Security as long as possible. With benefits rising roughly 8 percent per year from age 62 to 70, the strategy of delaying benefits can make the difference between financial scarcity and relative security. This is one of many reasons why the sooner you sit down with a qualified, objective financial planner and prepare a financial dashboard to guide your decisions, the better off you’ll be. Contact us at Life Point Law to get any of your Social Security questions answered.

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