Archive for January, 2014

Retirement Benefits: How Social Security, Medicare and Retirement Accounts Change in 2014

Thursday, January 30th, 2014

Medicare, Social Security retirement benefits, and individual retirement accounts all change in small but important ways in 2014, and people too young for Medicare will have new health insurance options. Here is what is changing.

First, thanks to the Affordable Care Act, people retiring before age 65 can now purchase health insurance on the new state health insurance exchanges. People can no longer be denied health insurance because of a pre-existing condition, and subsidies may be available for low and middle income earners.

For people on Medicare, the Part D prescription coverage gap has lessened in effect. Once a Medicare beneficiary has spent $2,850 on medication, then there is a gap until catastrophic coverage kicks in after $4,550 in costs for medication. In that gap, beneficiaries were required to pay 79 percent of drug costs, but that decreases to 72 percent in 2014.

Social Security benefits go up by 1.5 percent in 2014, due to the annual cost-of-living increase. The average increase will be $19 per month for individuals and $31 per month for couples who are both receiving benefits.

Social Security taxes increase for some in 2014. Workers usually pay 6.2 percent of their income into the system until they reach the $113,700 tax cap for the year. For 2014, that cap rises to $117,000.

Finally, the income limits for those eligible to contribute to individual retirement accounts (IRAs) and 401(k)s have increased. Investors who have workplace 401(k)s and also want an IRA can claim a tax deduction for IRA contributions until their adjusted gross income (AGI) reaches between $60,000 and $70,000, an increase of $1,000 over last year. For married couples, the income limits are now between $96,000 and $116,000. The income phaseout range for investors whose spouses have a 401(k) is up $3,000 from last year, to between $181,000 and $191,000. For Roth IRAs, the income phaseout range increased by $2,000, to between $114,000 and $129,000, or for married couples between $181,000 and $191,000.

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Leaving Unequal Inheritances to Children Can Cause Problems

Wednesday, January 22nd, 2014

Many people creating or updating an estate plan are blessed with children and grandchildren, and enough assets to leave them a significant inheritance. However, deciding how to provide for future generations can lead to conflict, and much of that conflict stems from unequal treatment of children, whether it is intended or not. Here are a few pitfalls to avoid.

In some families, especially in previous generations, it was common to treat sons and daughters differently in regards to inheritances. A family business might be left to sons, while another asset such as a trust may have been created to provide for daughters. Needless to say, this can cause resentment and disputes. In modern times, such gender distinctions are less common. However, parents creating an estate plan often still choose to treat some children differently.

Parents sometimes consider providing for their adult children differently based on each child’s family income and assets. While this may seem like fairness, it is likely to cause resentment. It is, of course, one’s right to distribute one’s assets according to one’s wishes. However, parents may want to consider simply dividing their assets equally among their children. This simple solution can head off arguments and hurt feelings.

Distribution of assets to one’s children and grandchildren during one’s lifetime may be unequal for valid reasons. Paying for college may entail a greater cost for one child than for another. Helping to provide for grandchildren may mean that one’s adult children with more children of their own receive more help. These matters are best approached with openness and an attempt at fairness, keeping in mind individual circumstances.

When it comes to planning one’s estate, there may be a temptation to either mirror those inequalities by leaving more to adult children with more children of their own, or to make up for them by leaving something additional to one’s other children. However, the best approach may be the simplest: dividing one’s estate equally among one’s adult children, and providing that in the case of an adult child who has passed away, that any grandchildren receive that child’s share of the estate.

Passing on a family business may seem like a special case, but it need not be. If one or more adult child has had a special role in a family business, then that role will likely continue. Ownership of a family business may still be passed on to all adult children equally, with a child who has worked in the business continuing to be compensated for his or her work. Alternatively, a child who works in the business can receive ownership shares during the parents’ lifetime, so that the remaining family shares are distributed equally upon the parents’ death.

Passing on an inheritance to one’s children should be a cause for celebration rather than disputes. Making distributions as equal as possible is one way to keep it that way.

 

 

Nonprofit Groups Help Seniors Feed Their Pets

Friday, January 10th, 2014

Meals on Wheels now helps some seniors get donated food for their pets. For many seniors, a pet is a lifeline, providing companionship to ward off loneliness and depression, and promoting physical and mental activity. And of course, people love their pets, so much so that nonprofit groups that help seniors in need found that some seniors were giving donated food meant for them to their pets. The groups have responded by arranging for pet food to be included with deliveries

The arrangement comes from a partnership between organizations that help low-income seniors and pet groups around the country. Meals on Wheels is one of the organizations involved, and they have cooperated with a number of independent pet groups in several different states.The pet groups ask volunteers to collect donated pet food and bring it to Meals on Wheels or another agency that delivers food. The pet food is delivered along with regular deliveries to seniors who need it. The groups also deliver to community centers, nursing homes and senior centers. The organizations said that seniors who are eligible for Meals on Wheels or similar programs usually qualify for the free pet food deliveries as well.

The groups said that pets are extremely important for seniors, and that it is not unusual for low-income seniors or people with disabilities to feed their pets before themselves, sacrificing their own health.

One of the organizations, LifeCare Alliance, began a pet food delivery program five years ago in Columbus, Ohio and now brings donated food to over 1,000 animals per month. The group started the program after learning that many of the people they served were extremely isolated, with 70 percent reporting that they did not see anyone other than a Meals on Wheels driver each week.

Another pet food delivery program, AniMeals, began in 1984 in San Diego, among the first in the nation. The group delivers food to 250 pets each month, relying on 40 volunteers to collect 3,200 cans of wet food and about 3,000 pounds of dry food each month. The group has bins in pet stores for customers to donate food for the program.