Miscellaneous Take-Aways From Free-Meal Seminars

 

I periodically attend free-meal seminars to see what questions older adults have about their finances to inform future blog posts and classes. Free food is also a side benefit. Unfortunately, most presentations include little, if any, time for participant Q&A. Rather, their emphasis is promoting the program sponsor and sharing “teaser tidbits,” instead of complete explanations, of financial topics.

 

I also noted frequent use of negative statistics about the future of Medicare and Social Security (a 21% to 25% reduction in benefits when the trust fund is depleted). Also, the phrase “come sit down with us” was used repeatedly. Nevertheless, useful information is sometimes shared. Below are some take-aways from several recent “free meal” presentations that I attended:

Probate Process- Ways to avoid probate or reduce the amount of assets that are subject to it were discussed. They include beneficiary designations, payable on death (PoD) and transfer on death (ToD) designations, joint tenancy with right of survivorship, and trusts.

 

Account Minimums- Seminar presenters had minimum investable asset requirements for new clients of $250,000 and $500,000. They stated their minimum requirements up front so attendees could judge if they were a good fit. Remember, some folks were just there for the free meal and there was no income and asset screening in advance.

 

Tax Rates- Presenters noted that “taxes are on sale” with some of the lowest tax rates in recent U.S. history made permanent with the OBBBA law. In 1944, the highest tax rate was 94%. Attendees were urged to monitor income to “fill up their tax bracket” but not move up to the next highest one.

 

Sequence of Returns Risk- This was a very important topic to cover. Sequence of returns risk is the danger that poor investment returns occur early in retirement while withdrawals are being made. Early losses can permanently reduce a portfolio's value, making it harder to recover and increasing the chance that retirement savings will be depleted sooner.

 

IRMAA- IRMAA (Income-Related Monthly Adjustment Amount) is an extra surcharge added to Medicare Part B and Part D premiums for higher-income beneficiaries. The surcharge is based on income reported on tax returns, typically from two years earlier. IRMAA is basically a tax and is only going to go up in future years as health care expenses rise.

 

Beneficiary Designations- Presenters often rightly urged attendees to make sure that their beneficiary designations were up to date on life insurance policies and retirement savings plans and to name contingent beneficiaries as a “Plan B.”

 

Long-Term Care (LTC)- One presenter noted that traditional LTC insurance policies have become “dinosaurs.” Instead, most LTC insurance policies sold today are hybrids between either life insurance or an annuity and LTC insurance. Seven out of 10 older adults will need some type of LTC service at some point during the remainder of their life.

 

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.

Take-Aways From “Free Lunch” Cremation and Funeral Seminars

 

It seems like almost every day, I receive a postcard or brochure about a “free meal” seminar at a local restaurant. This happens when you live in a 55+ community within a Florida county that has many 55+ communities. Various vendors know where we live! Most of the seminars are related to investing but some are about prepaid funeral and cremation plans.

Curiosity got the better of me so a friend and I recently attended cremation seminars presented by two different prepaid funeral/cremation plan companies. I was curious to learn about local service providers and to see if my experience paying for my late brother’s cremation was typical. In that situation, I was 1,100 miles away and literally picked out cremation-related services on a website and added them to a “shopping cart,” similar to an Amazon order.

 

Below are four take-aways and Barbservations from the seminars:

 

Benefits of Preplanning- Both seminars stressed the benefits of pre-planning: peace of mind (especially for solo agers), assuring that your final wishes will be carried out, no “second guessing” of what you want by family members, no strain on family members’ finances, and locking in current costs vs. expenses that will undoubtedly increase in the future. There is also security in knowing that funds in a prepaid plan are placed in a state-run trust and are completely refundable.

 

Relatively Modest Costs- The lowest-priced cremation plans from both companies, including administrative fees, were under $1,500. This was close to the $1,690 that I unexpectedly paid for my brother’s cremation, which included mileage fees for transporting his body from Queens, NYC to a crematorium in central Long Island. I simply put that bill on my credit card and was reimbursed as a priority creditor several months later. Not everyone is able to easily “front” this expense, however.

 

Preliminary Planning- It is smart to determine your final wishes well in advance of death and share them with loved ones and service providers. This includes where you want to be buried, memorial service preferences, and other details, even writing your own obituary. For example, I want to be cremated and have my ashes scattered at a beach. I learned that prepaid funeral/cremation plan companies can actually make that happen with a special beach for just this purpose. I also learned that both companies have special Veterans packages that are aligned with national cemeteries.

 

The Elephant in the Room- It was clear, by reading the audience, that people were concerned that they may not actually die in Florida. Thus, they were hesitant to sign a contract with a Florida prepaid funeral/cremation plan company. Several noted that the surviving spouse of a couple would likely move out-of-state to be closer to family. Both companies’ basic plans cover picking up a body within a 75 mile radius. Their premium plans, however, can follow deceased clients anywhere.

 

Two final thoughts from the seminars: 1. Death is not a “what if”; it will definitely happen and 2. Planning (whether it includes a prepaid funeral/cremation plan or not) is a gift for loved ones.

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.

Barbservations From Another “Teaser” Seminar

This is not my first post about attending a seminar or webinar with the stated objective of addressing attendees’ concerns about required minimum distributions (RMDs) and income taxes in retirement. I have gone “undercover” several times before to check out seminar venues as well as the accuracy of content being presented and how well seminars adhere to their marketing messages.

Once again. I was disappointed. A seminar held at my 55+ community targeted me and my fellow residents with a series of Facebook ads. After registering, I received an e-mail confirmation that included this paragraph: “This workshop is not a sales pitch in disguise. Our primary objective is to help you get your questions answered so you can live a healthy and wealthy retirement.” 

Sadly, this was not the case. Within four minutes of the seminar’s start, the presenter started describing his company’s services and encouraging attendees to “come sit down with us” to discuss their finances. He also used the phrase “what we do” at least several dozen times. Below are some additional Barbservations from someone who has been a professional financial educator for 47 years:

Lots of Unexplained Terms- The presenter used many financial terms without explaining them and I wondered if many participants understood what he was saying. Case in point: effective tax rate. He never explained that this is the percentage of tax owed on a person’s total taxable income and is calculated by dividing taxes owed by taxable income (e.g., $7,000 ÷ $50,000 = 14%). 

Very Small Font Sizes- Whether this was intentional or not, the slides that were presented were very difficult to read. Any seasoned financial educator would never make this mistake. I was always taught to follow the 6 x 6 rule when preparing PowerPoint slides: limit each slide to no more than six bullet points and limit each bullet point to no more than six words.

Scary Stories- Designed to get people to hire his company, the presenter told stories about the “widow’s tax” (i.e., the change in tax filing status from married filing jointly to single after a spouse passes away) and the “kiddo’s tax” (i.e., the requirement that non-spouse beneficiaries of tax-deferred retirement savings deplete the account and pay taxes on their inheritance within ten years). The speaker implied that only a financial advisor could help people navigate these challenges.

Correct Information- In between sales pitches were nuggets of solid personal finance information:

• The biggest fear of older adults is running out of money during their lifetime

• Common reasons that people run out of money are taxes, market risk, and long-term care expenses

• Proactively managing taxes is preferable to a passive “I’ll just take my RMD” approach

• If there are things you want to do in life and you have the money, do it now and don’t procrastinate

• Risk tolerance is feelings about investment risk; risk capacity is how much you can afford to lose

• People don’t necessarily need long-term care (LTC) insurance products but they need a LTC plan

• There can sometimes be decades between when people create estate plan documents and when they use them; it is important to review your documents periodically and update them as needed

Barbservations From a Free Dinner Seminar

Not a week goes by that I don’t receive colorful tri-fold invitations to free meal seminars for investments and preplanned burials and cremations. Sometimes as many as five a week. Living in a 55+ community in a state (Florida) with many older adults undoubtedly makes me a target. 

Recently, some neighbors and I decided to attend an investment seminar, primarily to see the venue, which is a high-end private golf club in a gated community that is not generally open to the public. I also figured that I would get some useful content for a blog post in addition to the free meal.

Below are five “Barbservations” about the seminar format, content, and take-aways:

You Will Get Hungry- I typically eat dinner around 6:30 pm, which is when the presentation was slated to start. Actually, it was more like 6:45 pm. The meal did not get served until 7:45 pm. Luckily, I expected this might happen and brought a granola bar to tide me over when my stomach started to growl loudly. I couldn’t help wondering if everyone else was getting very hungry also. I saw a few people looking at their watches.

Content Did Not Match the Invitation- Ten topics were listed in the seminar invitation. Only a few were actually addressed in the presentation, which included the presenter’s life story, topics not listed on the invitation, and a variety of “industry-speak” phrases (e.g., “duly licensed”). There were, however, several very instructive stories (e.g., a client who never changed a beneficiary designation from his deceased father to his wife, had no contingent beneficiary, and the asset took 13 months to go through probate, thereby delaying much needed income to the spouse).

Changes in Guaranteed Income- This is an important topic for retired married couples, who comprised the bulk of the audience. A story was shared about a couple that had $6,000 in income and only $2,000 when the wife was widowed and lost all pension benefits and was left with only one Social Security check. I’m not sure why this was so. Fear mongering? Under the 1984 Retirement Equity Act, workers cannot waive survivor benefits without the written consent of their spouses. There should not be any unexpected surprises. Take-away: a good question for spouses to ask each other is “If you die first, how much money will I receive?”

Fees Erode Wealth Accumulation- The presenter asked for a show of hands to answer questions about attendees’ knowledge of prices for consumer purchases (e.g., food and gas). He then went on to make the point that, unlike food and gas prices, many investors do not know what they pay in fees for investments and investment advisory services. Point well taken. If someone pays 2% of a $100,000 portfolio in fund + advisor fees, that is $2,000 a year and $20,000 in ten years!

Payable on Death Designations- The presenter rightly noted that Payable on Death (PoD) designations on bank accounts (as well as Transfer on Death (ToD) on investments) are a form of estate planning so non-retirement account assets can pass free of probate. Like beneficiaries, PoD and ToD designations must be kept updated. An excellent piece of advice was to keep adding PoDs to new CDs that rollover from previous CDs because they are a new contract.

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.

Highlights from an Estate Planning Seminar

I recently attended a local estate planning seminar geared for- and marketed to- older adults. I decided to go “undercover” to see if there was any evidence of manipulative sales practices masquerading as “financial education.” Sadly, I found some. 

Specifically, a presenter who was not an attorney and had no recognized financial planning designations whatsoever pitching the legal services of a colleague who was not in attendance. The original program publicity contained neither the name of the sponsoring company or the presenter’s name or credentials.

                                                  Barbservations

I counted at least 50 times the presenter used the phrase “I’m not an attorney but…”and at least 30 pitches for revocable living trusts as suitable for everyone without considering the specifics of their financial situation. The presenter also threw out many legal terms (e.g., A/B trust) without explaining them, disparaged the probate process repeatedly, and occasionally presented dated information (e.g., incorrect gift tax and estate tax exemptions from 2021).

In addition, he distributed a so-called “Consumer Survey” at the end, ostensibly to solicit feedback on the seminar but primarily to harvest participants’ personal information (e.g., date of birth) and contact information (address, e-mail, and phone number). I took my survey with me and left the seminar shortly thereafter when the presenter started pitching various “combo packages” for legal documents. I don’t know how many participants actually returned this form.

Nevertheless, despite all my misgivings about the content and format of the estate planning seminar and its marketing pitches, there was some helpful information shared. 

Below are eight useful “nuggets” to consider as you make plans for the management and distribution of your assets both during your lifetime and upon your death:

Check Document Reciprocity- Discuss this with an estate planning attorney when you move to another state. Many states have reciprocity with other states. This means that a state (e.g., my home state of Florida) will accept any will as valid if it was valid in the state where it was prepared. However, valid wills from other states may still be difficult to execute due to differences among state statutes and how they are interpreted. An attorney can identify legal landmines.

Get Everything in Writing- Recognize the power of legal documents, such as wills and trusts, that provide documentation and enforcement regarding a person’s wishes regarding the distribution of their property. Oral promises made to someone are non-binding. The speaker recounted a story of a deceased man’s second wife who promised to “take care of” his children (her stepchildren) financially, but kept everything for herself and did not give them any money.

Avoid Document Conflicts- Make sure that there is no conflict between a will and other legal documents relating to the ownership or distribution of assets. The title on assets (e.g., joint ownership with right of survivorship) or beneficiary designations on contracts such as life insurance policies, individual retirement accounts (IRAs), and tax-deferred employer retirement savings plans always take precedence over the terms of a will.

Review Beneficiaries- Periodically review (and revise, if needed) persons named to inherit your assets or manage your financial affairs. These people should always be people that you trust and people who are capable of performing their designated roles. Use this worksheet to list all of your beneficiaries and personal representatives in one place.

Keep Heirs Updated- Communicate ongoing changes to estate plans. The speaker noted that updates to estate planning documents should be shared with trusted family members. He noted that a common reason for estate planning challenges in the court system is when people change their legal documents but never notify their loved ones about the changes. Family members and/or other heirs, who have copies of previous versions of the legal documents, later contest the change.

Expect Probate Expenses- Be aware that there is a cost to settling someone’s estate. Probatable assets are those that are owned by individuals without a named beneficiary or survivorship right. For example, a bank account, a mutual fund held in a taxable account, and an automobile. Probate estate administration costs vary according to the size and complexity of someone’s financial assets. The complexity of the probate process also varies among states. The workshop presenter cited several sources that estimate the cost of probate as between 4% and 7% of the value of the assets being probated.

Retitle Assets Within Trusts- Expect that setting up a trust will take some time and “legwork.” When someone becomes the grantor of a trust, their individually owned assets must be retitled into the name of the trust, which becomes a separate legal entity. Assets that can go into a trust include deeded assets like a home or other real estate, financial assets (e.g., bank and investment accounts), collectibles, and life insurance.

Don’t Procrastinate- Take action to address gaps in estate planning whether it is getting legal documents prepared or updated, making a list of digital asset usernames and passwords, or communicating estate planning wishes with trusted loved ones and/or designated personal representatives. If not today, when? The future is not promised to anyone.

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.