Thursday, May 30, 2024

Basics of Advance Directives


Advance directives are written instructions for actions to be taken in the future in case people become incapable of making decisions. They designate specific people (typically referred to as “agents” or “proxies”) to step in for the creator of an advance directive to make decisions that the creator wishes and to take the burden of decision-making off family members or other caregivers.




Benefits of advance directives include: reducing disagreement about health or financial decisions among family members and, for health-related documents, avoiding unnecessary suffering by a patient. Many people think advance directives are just for “old people,” but they are important for all adults. One auto accident or severe illness can result in anyone needing advance directives.

 

There are three common advance directive documents that authorize someone to legally act on someone’s behalf until the creator revokes them or dies:

 

Living Will- Specifies desired medical treatment in “end of life” situations including a terminal condition and a persistent vegetative state. For example, the use of feeding tubes, breathing machines (ventilators), and “Do Not Resuscitate” (DNR) orders.

 

Health Care Proxy- Also known as a durable power of attorney for health care, this document designates someone, often called a surrogate, to make health care decisions.

 

Durable Power of Attorney (PoA)- Designates someone, often called an agent, to make financial transactions (e.g., paying bills, making deposits, applying for benefits, preparing tax returns, and signing checks). The agent’s power ceases at the time of the durable PoA creator’s death.

 

Below is some general information for the use of advance directives:

 

Communicate With Your Agent- Never “surprise” people by listing them in advance directive documents without obtaining their permission. Instead, formally request their assistance and have a discussion about your preferences for health care and the location of key financial documents.

 

Make Documents Accessible- Store advance directive documents in an accessible location that trusted family members or other individuals know about. Avoid using a locked strong box or desk drawer (unless the agent has a key) or a safe deposit box at a bank.

 

Review and Revise- Update advance directive documents every time there is a life change that affects people named in key documents. For example, a now ex-spouse who is named as a health care proxy or a durable power of attorney agent who pre-deceases you.

 

Share Health-Related Documents- Bring a copy of health care advance directives to a hospital where you are being treated (e.g., surgery) so they are available if needed and more likely to be noted in your patient chart and “noticed” by treating doctors. 

 

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

Thursday, May 23, 2024

Expert Recommendations to Avoid Scams

It seems like scams are everywhere these days and they affect people of all ages. Below are eight expert recommendations to avoid being a victim of fraud:



Get a Contract and Read It- Always have written contracts and review them carefully before signing them when engaging contractors or other service providers to perform work. Don’t leave any blank spaces and always keep a copy of any document that you are asked to sign.

 

Do Due Diligence- Get multiple in-person or online references for service providers (e.g., contractors, financial advisors, house cleaners, lawn care, plumbers) from family, friends, and/or co-workers and check them. Ask to see a vendor’s state license (where a state license is required) and proof of insurance (e.g., for contractors).

 

Don’t Pay Everything Up Front- Be very wary of any company that demands that most or all of the cost of a job be paid in advance. The party that has all the money has the upper hand and the other party has little recourse. A fully paid vendor could care less if you are satisfied with their  service or not. Instead, look for companies that charge a series of installment payments with the final payment due only after satisfactory completion of a product or service.

 

Beware of Personal Check Requests- Always make checks payable to a business name. Be wary if you are asked to make payments for business services to an individual. This is a “red flag” that the business owner may be untrustworthy and/or unlicensed.

 

Use Common Sense- Use the “smell test.” If an offer, deal, or discount does not “smell” right or sounds too good to be true, it probably is. Always employ common sense and a healthy amount of skepticism and walk away from or delete questionable purchases.

 

Beware of Testimonials- Ignore testimonials found in mailed advertisements, television infomercials, and online. The only testimonials that are worth believing are those that come from people that you know and trust.

 

Read Fine Print- A common phrase used by fraud prevention specialists is “the large print giveth and the small print taketh away.” Don’t rely on verbal sales pitches and “guarantees” made by salespeople. Read the fine print and, if you don’t understand it, find someone who does.

 

Beware of “Urgent” Offers- A common “red flag” of fraud is deals presented with language such as “limited time offer” and “you must act now.” Remember that the easiest way to steal people’s money, with the possible exception of at gunpoint, is to force them into a quick decision.

 

In summary, keep your BS meter running at all times and be alert to indications that something is amiss. Nobody will look after your finances better than you do.


This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

Thursday, May 16, 2024

Exit Mode Thinking and Lasts: Some Barbservations

 

“Exit mode” thinking is a psychological state where people disengage from responsibilities, relationships, and/or commitments that they will soon leave behind. It is particularly evident when people are about to move, change jobs, transition out of a role (e.g., empty nesters) or enter a new phase of life (e.g., “senioritis” and retirement) and can impact behavior and decision-making.

 

When people are in exit mode, there may be a lack of care, concern, and responsibility (“it’s not my problem anymore”) or attention to detail about things that they will soon no longer be involved with and will no longer affect them. In other words, a perceived lack of consequences. People often detach from current responsibilities, including personal finances, and focus on future outcomes, sometimes to the detriment of others left behind.

 

Here are two examples (i.e., Barbservations) of exit mode thinking that I have recently observed:




 

Moving Out- Residents of my 55+ community are getting increasingly concerned about the looming handover of management from the developer to a resident-run homeowners association in late 2026 or 2027. There are many questions about adequate reserve funds, potential sinkholes in manmade lakes, future HOA fees, and uncompleted work orders. I’ve heard the words “getting out of Dodge” several times as people contemplate bailing and leaving other residents to deal with future problems.

 

Dying in Debt- Another troubling observation is overhearing conversations among some older adults about “playing the odds” between their health status, anticipated life expectancy, and consumer debt load. Sadly, revolving high debt balances by making minimum payments until you die is seriously being discussed. If an estate does not have enough money to pay off a deceased person’s individually-held debts, it is considered insolvent and the debts usually go unpaid. Of course, there is also no money available for heirs either as I recently observed with a death within my family.

 

Exit mode thinking can also prompt positive action when framed through a lens called “lasts.” I devoted a chapter to this concept in my book, Flipping a Switch.  Below is a brief excerpt:

 

Sometimes, at the exact moment that something is happening, we realize it is occurring for the last time in our life. For example, the final time we sit at our desk at a former job. Other times, we do not realize that “lasts” were actually the last time until later. With respect to spending decisions, if someone believes a car, house, cruise, or other big purchase might be the last one of their life, they may decide to spend more lavishly if they have the money to do so. Example: older adults might take a trip and invite (and pay for) their entire family to join them.

 

I also discuss ROLE (return on life expectancy) calculations in my book; i.e., “mental math” comparing how long things might live (e.g., a pet) or last (e.g., a refrigerator) in relation to your current age and whether certain expenses (e.g., an expensive dental crown or a product with a ten-year guarantee) are “worth it.”

 

In summary, as people age, their time orientation changes. It is a “switch” that flips gradually over time. Be aware of exit mode thinking in your life and how it influences your personal decisions.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

Thursday, May 9, 2024

Retirement Research Results and Recommendations

 

I recently reviewed notes that I took at recent presentations about retirement. Below are seven recommendations that stood out to me and might be helpful to Money Talk blog readers:


Define Your New Self- People may retire after decades of work, but they do not retire from life. To prepare for this transition, make a point to define yourself by who you are rather than what you do. Start with the words “I am [your name]” and then describe a passion (e.g., travel), a hobby (e.g., stained glass), a pet (e.g., “I have a dog named Sadie”), a favorite sport (e.g., “I love to play pickleball), or some other aspect of your life without incorporating your job title or employer.

 

Be Realistic About Retirement Age- Retirement age is an important assumption in retirement planning and can happen earlier than expected. Studies have found an average gap of about 4 years between expected and actual retirement age and about half of U.S. workers retire earlier than expected. The older the age that people plan to retire at, the less likely they are to reach that goal. One study found that people retire a half year early for each year of work planned after age 61.

 

Know the Planning Levers- There are four key moving parts in the retirement planning process. People can retire earlier or later, save/invest more money or less, spend more money or less, and take more or less risk with investments. It is ironic that many people who have sufficient money to live without an employer paycheck (i.e., financial independence) often choose to work longer.

 

Face Your Fears- Why do some people delay retirement even when they reach financial independence? One reason is that they don’t want to deal with future changes or they fear conflicts with their spouse (e.g., a retirement living location), so they keep on working. Conversely, many people who need to work in later life to pay their bills often can’t due to health issues or layoffs.

 

Understand Potential Life Expectancy- Retirement is “not just 10 years of golf and you die.” Rather, it can last 20 to 30 years (or longer) for many people. This necessitates attention to both personal health habits (to live the highest quality of life for as long as possible), adequate savings (to not outlive your money and rely solely on Social Security), and future long-term care needs.

 

Consider Charitable Gifting- People start to think more about leaving a legacy as they get older. Research indicates that people who gift time and/or money to charities often live longer than others. Also, many donors want to know the results of their giving. If a charity does not provide this information, donors may stop gifting. Donors also select charities that align with their values.

 

Consider the Four Seasons- The four seasons of retirement planning are: Accumulation (e.g., saving/investing in taxable accounts and qualified retirement plans), Distribution (e.g., pensions, annuities, dividends and interest, and required minimum distributions), Preservation (not running out of money during your lifetime), and Transfer (passing on assets when you pass away).


When planning for later life, it is best to be proactive- not reactive. Additional information about retirement related topics and transitions in later life can be found in my book, Flipping a Switch.


This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 


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