Filial Responsibility Laws

Posted by on Aug 7, 2016 in 401k, 403b, Boomers. Millenials, college planning, credit card statements, Elder Care, family finances, Fixed Income Investing, insurance, Investing, IRA, IRS, Medicaid Planning, Medicaid Recovery, Medicare Planning, Retirement, retirement planning, social security, tax returns, taxes, TSA | 0 comments

Could you be required to provide financial support to your parents?     Provided by Frederick Saide, Ph.D.   Imagine your parents outliving their money. A terrible thought, right? Should this occur, there will be one of two outcomes. Either your parents will move in with you (or someone else), or your parents will become indigent. Hopefully, your parents have saved, invested, and managed their money well enough to avoid such a plight, whether they live together or separately. If either or both of your parents do end up in such dire financial straits, the burden of rescuing them could fall on your shoulders. That is because 29 states have filial responsibility laws.1,2 Imagine drawing down your retirement savings to pay for nursing home care. Thanks to these obscure, but enforceable, state laws, this scenario is not unimaginable. Nursing homes may turn to these statutes to demand payment of eldercare bills. These laws can be challenged in court, but sons and daughters may have little recourse. In 2012, the Superior Court of Pennsylvania upheld a lower court ruling requiring a man to pay off a $93,000 long-term care bill owed by his mother to a nursing home. In August 2015, the same state court upheld a ruling that a man had to pay his mother $400 a month in filial support.1,2      In the future, will assisted living facilities and nursing homes cleverly exploit such laws (and legal precedents) to file claims or lawsuits against the children of patients? Baby boomers, Gen Xers, and millennials may face that risk.     Some filial laws do offer loopholes. In Pennsylvania, for example, children cannot be held legally responsible under the state filial law if their parent abandoned them for a decade or longer during their childhood or if the parent’s immediate family is incapable of paying the debt.2   How easily can a nursing home saddle you with your mom or dad’s eldercare bill? Not that easily. In order to cite filial responsibility laws, the nursing home or assisted living facility usually has to provide proof that the resident cannot pay the cost of care.3 That hurdle may not deter eldercare providers as baby boomers enter their sixties, seventies, and eighties. Providers may be forced to explore every possible avenue to collect the payments that will keep them in business.   Will Medicaid pay for eldercare if a parent runs out of money? It often will. If the applicant is already eligible for Medicaid prior to requesting coverage, that coverage can be retroactive up to three months from its starting date.3 Medicaid does have its potential downside. By law, state Medicaid programs must try to collect reimbursement for coverage of...

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The New Gradual Retirement

Posted by on Aug 1, 2016 in 401k, 403b, Boomers. Millenials, college planning, credit card statements, family finances, Fixed Income Investing, insurance, Investing, IRA, IRS, Retirement, retirement planning, sales, social security, tax returns, taxes, TSA, Uncategorized | 0 comments

Working a little (or a lot) after 60 may become the norm.   Provided by Frederick Saide, Ph.D.   Do we really want to retire at 65? Not according to the latest annual retirement survey from the Transamerica Center for Retirement Studies which gauges the outlook of American workers. It found that 51% of us plan to work part-time once retired. Moreover, 64% of workers 60 and older wanted to work at least a little after 65 and 18% had no intention of retiring.1     Are financial needs shaping these responses? Not entirely. While 61% of all those polled in the Transamerica survey cited income and employer-sponsored health benefits as major reasons to stay employed in the “third act” of life, 34% of respondents said they wanted to keep working because they enjoy their occupation or like the social and mental engagement of the workplace.1 It seems “retirement” and “work” are no longer mutually exclusive. Not all of us have sufficiently large retirement nest eggs, so we strive to stay employed – to let our savings compound a little more, and to leave us with fewer years of retirement to fund. We want to keep working into our mid-sixties because of two other realities as well. If you are a baby boomer and you retire before age 66 (or 67, in the case of those born 1960 and later), your monthly Social Security benefits will be smaller than if you had worked until full retirement age. Additionally, we can qualify for Medicare at age 65.2,3 We are sometimes cautioned that working too much in retirement may result in our Social Security benefits being taxed – but is there really such a thing as “too much” retirement income? Income aside, there is another question we all face as retirement approaches. How much control will we have over our retirement transition? In the Transamerica survey, 41% of respondents saw themselves making a gradual entry into retirement, shifting from full-time employment to part-time employment or another kind of work in their sixties.1        Is that thinking realistic? It may or may not be. A recent Gallup survey of retirees found that 67% had left the workforce before age 65; just 18% had managed to work longer. Recent research from the Employee Benefit Retirement Institute fielded roughly the same results: 14% of retirees kept working after 65 and about half had been forced to stop working earlier than they planned due to layoffs, health issues or eldercare responsibilities.3 If you do want to make a gradual retirement transition, what might help you do it? First of all, work on maintaining your health. The second priority: maintain and enhance your skill set, so...

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