Practical Insights for Your RETIREMENT GOALS

January

2013

Your Retirement Strategy Newsletter

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Retirement Statistics

Here are a few statistics about retirement and

the people who are in that phase of life.

One of the 77 million baby boomers reaches 50 every

seven seconds. That is around 11,960 people a day and

4 million a year.

The age for retirement was set at 65 in the late 1800's.

It is now generally accepted among gerontologists that

life expectancy may exceed 85 years-- and may, in fact,

approach the biblical life span of 120.

In 2001, 77 million Americans were 50 and older

(comprising 28% of the population). By 2020 that

segment will be 36% of the population.

Nearly 10,000 Americans turn 65 every day, that figure

will jump to 12,000 as the baby boomers age.

Nearly 35 million Americans were 65 or older in year

2000.

Consumers 65 and over make up 13% of the

population but account for only 2% of the characters

on prime-time TV.

In the next 25 years, there will be over a

million centenarians in this country.

WOMEN WHO REACH

AGE 65 CAN EXPECT

TO LIVE ANOTHER

20.4 YEARS

According to the Social Security

Administration, women who

reach age 65 can expect to live

another 20.4 years in retirement,

compared to 18.1 years for men.

This means that women need

more retirement savings than

men unless they have a pension

that provides sufficient lifetime

income. Unfortunately older

women are less likely to have

income from pensions.

Whereas 46.9 percent of men age

65 or older received some sort of

retirement benefit besides Social

Security in 2008, only 41.9

percent of women received a

retirement benefit, whether

directly or through a spouse.

80 Is The New 65 For Many Middle Class Americans When It Comes To Retirement, Wells Fargo Retirement Survey Finds “Retirement Age” a fading concept as people plan to work until reaching savings goal Middle class Americans below age 50 more open to Social Security and Medicare cuts to help balance budget, while 50-somethings say “Hands off!”

About 76 percent of respondents said it's more important to reach a specific dollar amount before retiring, compared with 20 percent who said it's more important to retire at a given age, regardless of savings, according to the survey of adults with household incomes or assets from about $25,000 to $100,000.

“Eighty is the new 65,” Joseph Ready, executive vice president of Wells Fargo Institutional Retirement & Trust, said in an interview at Bloomberg headquarters in New York before the survey was released today.

“It's a real sea change.”

About 74 percent expect to work in retirement, according to the survey, with about 39 percent working because they'll need to and 35 percent because they want to. And 25 percent of those surveyed said they expect they'll need to work until at least age 80 because they don't have sufficient savings.

“People are starting to move toward understanding the different levers of what they're going to have to do to make it in retirement,” Ready said.

About 68 percent of those surveyed said they're not confident the stock market is a good place to invest their retirement savings. About 45 percent of respondents said if they were given $5,000 they would buy a certificate of deposit, and 50 percent said they'd invest it in stocks or mutual funds.

No Good Alternative

“Even though there's a lack of confidence, I don't know that they see there's a good alternative,” to investing in stocks, said Laurie Nordquist, executive vice president of Wells Fargo Institutional Retirement & Trust.

The Standard & Poor's 500 Index returned 1.32 percent this year through Nov. 14. One-year CDs yielded 0.35 percent and five-year CDs paid 1.19 percent on average as of Nov. 3, according to Bankrate.com, an online provider of consumer-rate information and a unit of Bankrate Inc.

Survey respondents had saved a median of $25,000 towards retirement and estimated they'd need a median of $350,000 to support themselves in retirement. About 42 percent expect to receive a pension or already receive one.

“The numbers don't add up,” Nordquist said. “The gap is probably larger than what they self identified.”

Those surveyed expect to withdraw about 18 percent on average from their savings each year in retirement.

About 57 percent of respondents said they're confident they'll have saved enough for retirement.

“You used to just save blindly, but I think the blinders are coming off,” Ready said.

Thanks to economy, 80 — YES, 80 — is the NEW 65

Common Misperceptions about Who Pays for Long Term Care

To alleviate some of the confusion about programs

that help with eldercare, we want to discusses

common misconceptions about who pays for

nursing home care, assisted living and home care.

Also discussed are programs in development that

one may have heard of but are not relevant to a

wider audience.

1. Medicare

Many people assume Medicare will pay for assisted

living, Alzheimer's / dementia and other long term

care. It does not. At best, Medicare will help pay for

short term skilled nursing.

2. Money Follows the Person (MFP)

This program is only for Medicaid-

qualified individuals who currently

live in nursing homes and wish to

move into the homes of their

families or the community. Learn

more about the Money Follows the

Person program and if it is available in your state

and relevant to your situation.

3. Affordable Care Act (ACA)

This Act, signed into law by President Obama in

March 2010, is umbrella legislation that reforms

many aspects of health care but does not

specifically provide financial resources to

individuals.

4. Social Security Disability Insurance (SSDI)

SSDI is not an option for seniors, rather it is a

program designed for those younger than 67

years old.

5. Older Americans Act

This act provides funding, to state and local

agencies called Area Agencies on Aging which

provide services that help seniors remain in their

homes longer such as meal services. It does not

provide money for long term care to individuals

directly.

6. Fannie Mae Home Keeper Reverse Mortgages

This program was discontinued in September 2008.

Other similar home equity conversion programs still

exist.

7. Community Living Program Grants

These grants are provided to the states for the

development of programs; these

grants are not direct assistance

provided to families. However,

families may still benefits indirectly

from these programs.

8. The CLASS Act

The CLASS Act is a government

sponsored long term care insurance program this

is not expected to have a positive financial impact

for seniors for several years to come.

On Friday, October 14, HHS Secretary Kathleen

Sebelius announced that she was pulling the plug

on the “CLASS Act”, a long-term care insurance

program contained in the health care law pushed

through Congress in 2010.

The program had to be killed because there

was no way to operate it in an actuarially sound

manner as required under a provision inserted

by then-Senator Judd Gregg. Secretary Sebelius

stated flatly that “we have not identified a way

to make CLASS work,” and so HHS would

“suspend work” on implementing it.

Thanks to all of our G.R.E.A.T clients for sharing the good times with us!

The 2nd Annual Holiday Party Was a H.U.G.E Success !

To view all of the pictures

from the holiday party, and

to order prints click the link

on our website.

“2012 Holiday Party Pictures “

2012

Thanks to all of our G.R.E.A.T clients for sharing the good times with us!

The 2nd Annual Holiday Party Was a H.U.G.E Success ! Bill and Mary Lafser

recently came in for

their yearly review. We

surprised Mary with a

birthday cake, and sang

“Happy Birthday” to her.

We have great clients,

and it’s always fun to show how much we care!

HAPPY BIRTHDAY MARY

2012

No matter how many years you are from calling it quits, it’s essential to have some kind of plan in mind

for financing retirement. The days of counting on Uncle Sam and a company pension to carry you

through old age are long gone. We’re living increasingly in a “yoyo” economy—short for “you’re on your

own.” But it’s easy to get fooled by some of the many myths about retirement planning that exist on the

Internet or in misguided advice passed along unwittingly by well-meaning family or friends. Heeding bad

tips could cost you in the future when you can least afford it.

MYTH 1: Medicare will take care of almost all your health-care needs.: Medicare covers about

half of all health-care costs for those enrolled in the program. For the rest, yes, you’re on your own.

That means you’ll be on the hook for out-of-pocket costs for uncovered services such as long-term

health care as well as dental, hearing and eye care, along with supplemental insurance costs. A 65-year-

old couple retiring this year is estimated to need about $240,000 to cover medical expenses throughout

retirement. Much of that comes in the final years of retirement.

MYTH 2: You’ll need far less income in retirement to maintain the same standard of living.: This

may be true in some cases, but it could be a life-changing mistake to count on it. Surveys of retirees

have found that many spend as much or more in the early years of retirement than before they retired.

Because retirement spending habits vary so widely, many financial advisors frown on the traditional rule

of thumb that you need 70 percent to 80 percent of your pre-retirement income to maintain your life-

style. If you reach retirement and find that was a bad guesstimate, “you may quickly find yourself

looking for work,” You may not need 100 percent of your earlier income. But take some time to analyze

what you expect to spend in retirement in order to lessen any anxiety.

MYTH 3: You can claim Social Security early and still get full benefits later: Applying for bene-

fits as soon as eligibility begins at age 62 will entitle you to monthly checks immediately. But when you

claim early, your benefits will be 25 percent less than if you had waited until your full retirement age

and 75 percent to 80 percent less than if you’d been able hold off until 70. “This myth is not only so

wrong but also dangerous,” When consumers claim their Social Security benefits, they lock in those

benefits for life.

Claiming early may still be the right move for some people, such as those with serious medical issues or a

family history that suggests they’re not likely to live to a ripe old age. But with people living longer and

retirement sometimes lasting decades, it’s best to make deliberate calculations and see if you can wait

longer in order to collect more.

MYTH 4: You'll be able to make up a savings shortfall by retiring later or working part-time in

retirement: That’s a hope or last resort, not a plan. It’s unwise to rely on future circumstances for your

60s or beyond. Forty percent of retirees were forced to stop working earlier than they had planned,

citing health reasons, having to care for a spouse or family member or a layoff.

Even a job loss well before retirement age can be tough to recover from. People age 55 and over

currently spend an average of more than 13 months on unemployment, - nearly five months longer than

for younger job-seekers. So don’t take it for granted you’ll be able to make up for years of failing to

save enough on the back end of your working life.

4 retirement planning myths debunked

With today’s long life expectancies, it’s crucial to plan for elderly parents and for your own elder

years. Whereas estate planning addresses what happens when someone dies, elder planning

addresses the possibility that a person may live to an advanced age. A big consideration in elder

planning is the possibility of living with diminished health for an extended period of time.

As you begin elder planning, consider these things:

1. Power of Attorney: An effectively drafted power of

attorney document gives another individual control

over financial and medical decisions. Someone with

power of attorney can make important decision on

behalf of an elderly person. Further, a durable power

of attorney remains effective after the death of the

primary person.

Springing power of attorney kicks in when someone is

no longer competent to make decisions for

themselves. This is a common power of attorney

feature, but consider it carefully. Dementia, like

Alzheimer’s, and other conditions can cause a person

to fluctuate between competence and incompetence, which leads to uncertainty about when the power

of attorney is effective.

2. Long-Term Care Insurance: Long-term care insurance covers costs associated with assisted living,

nursing facilities and skilled care given at home. It’s wise to consider long-term care insurance well

before you may need it. Often, individuals purchase it during their 50s, but you can buy it earlier or

later in life. Consider the cost of care in your area and the type of care you’d wish to receive when you

compare policy features.

3. Veterans’ Benefits: Seniors who served in the military may qualify for benefits. Veterans of World

War II, Korea, Vietnam or any other American war – and their widows/widowers – could receive a nice

tax-free monthly benefit. A married couple could qualify for up to $2,020 a month. To find out more,

contact the Veteran’s Administration.

4. Medicaid: This health coverage benefit provides assistance with the cost of nursing care – not to be

confused with Medicare, which does not. The criteria to qualify for Medicaid assistance varies

state- by-state, so careful research is required to see whether this benefit applies to your situation.

5. Elder Care Attorney: There are lawyers who specialize in elder care issues; some of these issues

just aren’t on a standard attorney’s radar. Government-provided benefits, local programs, tax

strategies and insurance plans are difficult to understand without careful research and deep

knowledge that most laypersons don’t possess.

Like most financial matters, a careful plan makes the process much easier and far less

stressful for everyone involved.

Start by talking with your family to learn everyone’s opinions and wishes. Next, it’s wise to have power

of attorney documents created because they’ll help you understand and frame the many issues

Elder Planning: Five Strategic Considerations for the Golden Years

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www.nbrs123.com

North Brothers Retirement Strategies

1000 Edgewater Point Dr., Suite 101 & 103

Lake St. Louis, MO 63367

Our firm utilizes a S.W.A.N. (Sleep Well At Night) approach to securing your

retirement future. Our strategies are designed to bring you financial stability and

peace of mind, so you worry less and live more, generate retirement income

that you can not outlive, and to create a legacy for those you love, that will be

meaningful and lasting.

1000 Edgewater Point Dr. Suite 101 & 103, Lake St. Louis, Mo 63367

Office (800) 334-0570

Local (636) 614-0394

Fax (877) 745-5505

www.TheNorthBrothers.com

OR www.NBRS123.com