Elder Financial Abuse Elder financial abuse is a growing national problem, costing victims an estimated $2.6 billion annually. Shockingly, half of Americans over age 65 show signs of financial abuse, which can include unnecessary services, excessive fees, stolen checks, and even family members withdrawing money without consent. Ric emphasized the importance of adult children monitoring their parents’ finances, discussing estate planning, and obtaining power of attorney to safeguard against abuse. Five signs of financial abuse were outlined: unnecessary purchases, unexplained disappearance of money or possessions, unpaid bills, large withdrawals, and individuals exerting excessive control over elderly parents. If you suspect abuse, contact law enforcement, adult protection services, or the National Center for Elder Abuse.

Graduate School Debt and Career Planning The financial implications of graduate school debt can be staggering, and Ric cautioned parents against allowing their children to incur six-figure debt without understanding its long-term impact. He advised having serious career conversations with children to ensure their education aligns with future income potential and specialty areas that generate sufficient earnings. Strategies to minimize debt include scholarships, employer-sponsored education programs, and military service in exchange for tuition coverage. Ric stressed the importance of viewing education as an investment in a child’s future and evaluating whether the cost of the degree is justified by the career benefits.

Insurance Needs and Financial Protection Insurance is a cornerstone of financial planning, not for wealth creation but for financial protection. Ric outlined key types of insurance, including disability insurance to protect income, life insurance for dependents, auto insurance, health insurance, and long-term care insurance. Statistics show that one out of two Americans over 65 will need long-term care, with costs averaging $7,000 per month or $84,000 per year. Ric advised purchasing the minimum necessary insurance to cover potential losses and emphasized analyzing risks and financial implications.

401(k) Plans and Retirement Savings Dallas Salisbury, CEO of the Employee Benefit Research Institute (EBRI), shared insights on 401(k) plans, noting the average balance in the U.S. is $67,000, while individuals who have contributed for 30 years average just under $200,000. Ric and Dallas emphasized the need for early and consistent saving, highlighting the importance of educating individuals about saving at home, school, and the workplace. Automatic enrollment and contribution escalation in 401(k) plans were discussed as effective strategies to encourage saving, along with pre-diversified investment options to simplify decision-making. Ric stressed that saving for retirement is a personal responsibility, and individuals must actively choose to save to avoid financial shortfalls.

Consumer Behavior and Saving Challenges While many recognize the need to save, instant gratification and impulse buying often derail financial goals. Surveys show that most individuals could afford to save an extra $25 to $75 per week but fail to prioritize it due to lifestyle choices and advertising promoting immediate enjoyment. Ric and Dallas discussed initiatives like America Saves Week and Choose to Save campaigns, which aim to educate and motivate individuals to save for their financial future. Tools such as financial planning checkups and public service announcements were highlighted as resources to help individuals understand their financial situation and make informed decisions.

Medicare and Retiree Health Care Costs Medicare covers only 64% of health care costs for retirees, leaving individuals responsible for nearly 20% of expenses, with private insurance and government programs covering the rest. Ric warned that these out-of-pocket costs could amount to hundreds of thousands of dollars for retirees and their spouses, making it essential to factor health care costs into financial planning. Proper planning can prevent financial strain during retirement.

Market Volatility and Investment Strategy When it comes to setting sell orders on 401(k) retirement funds based on market predictions, Ric advised against this strategy. Timing the market is incredibly challenging, and short-term performance often has little impact on long-term investing success. He emphasized diversification as a protective measure against losses and warned against emotional reactions to market volatility, which can lead to poor financial decisions. Staying invested through market ups and downs generally leads to better outcomes than trying to predict and react to market swings.

All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice.

Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.

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Investment Strategies: Timing and Misconceptions

A common misconception is that it’s either too early or too late to start investing. Consider the example of two investors: Jane begins investing at age 25 for 10 years, while John starts at 35 and invests for 30 years. Despite investing for a shorter period, Jane’s early start allows her investments to grow to $2.2 million, surpassing John’s $2 million. This illustrates the power of starting early and the impact of compound interest.​

Additionally, small daily savings can accumulate significantly over time. For instance, saving $4 daily on discretionary expenses like coffee can grow to approximately $132,000 over 30 years, assuming a 6% annual return. This highlights the importance of mindful spending and consistent saving.​

While the stock market carries inherent risks, historical data shows that from 2001 to 2020, the S&P 500 had an annualized return of 7.5%. However, the average equity investor earned only 3% due to emotional decision-making and market timing. This underscores the value of a disciplined, long-term investment approach.​

Understanding Social Security Benefits and Taxation

Social Security benefits may be subject to taxation depending on your combined income. For single filers, if combined income is between $25,000 and $34,000, up to 50% of benefits may be taxable. For incomes above $34,000, up to 85% of benefits may be taxable. For married couples filing jointly, these thresholds are $32,000 to $44,000 for up to 50% taxation, and above $44,000 for up to 85% taxation. ​SmartAsset+1Penn Wharton Budget Model+1Penn Wharton Budget Model

Combined income includes adjusted gross income, non-taxable interest, and half of your Social Security benefits. Implementing tax planning strategies, such as Roth IRA conversions, can help manage and potentially reduce the taxable portion of your Social Security benefits.​

Strategic Timing for Claiming Social Security Benefits

The age at which you claim Social Security benefits significantly affects the monthly amount you receive. Claiming benefits before reaching full retirement age results in reduced monthly payments, while delaying benefits increases them due to delayed retirement credits. For example, claiming at age 62 may yield a monthly benefit of $1,400, whereas waiting until age 70 could increase the benefit to $2,480. Factors such as life expectancy, financial needs, and tax implications should be carefully considered when deciding the optimal time to claim benefits.​SmartAssetSocial Security

Medicare and Anticipating Healthcare Costs

It’s a misconception that Medicare fully limits out-of-pocket healthcare expenses. Without supplemental insurance, there is no cap on these costs. Healthcare expenses are projected to rise, with estimates indicating that by 2040, nearly half of couples aged 65 and older will spend over 20% of their income on healthcare. A Fidelity study estimates that a 65-year-old couple will need over $300,000 to cover medical expenses in retirement, excluding long-term care. Planning for these costs is essential to ensure financial stability in retirement.​

Maximizing Health Savings Accounts (HSAs)

Health Savings Accounts offer a tax-advantaged way to save for medical expenses. Contributions are pre-tax, the account grows tax-deferred, and withdrawals for qualified medical expenses are tax-free. For 2025, the contribution limits are $4,300 for self-only coverage and $8,550 for family coverage, with an additional $1,000 catch-up contribution for individuals aged 55 and older. It’s important to note that contributions to HSAs are not allowed once you enroll in Medicare, typically at age 65. Investing HSA funds can provide long-term growth, making them a valuable component of a comprehensive retirement plan.​Optum Bank+4Fidelity Investments+4Wolters Kluwer+4

Personalized Financial Planning with Pure Financial Advisors

Pure Financial Advisors operates on a fee-only, fiduciary model, ensuring that clients receive unbiased, comprehensive financial planning. Their collaborative approach integrates certified public accountants and financial planners to address tax planning and investment strategies tailored to individual needs. With offices in multiple locations, including Irvine, Los Angeles, and Seattle, they are committed to providing personalized financial advice to local communities.​

Accessing Retirement Planning Resources

To assist individuals in preparing for retirement, resources such as the Retirement Readiness Guide are available. This guide offers insights on Social Security, taxes, Medicare, and investment strategies, serving as a valuable tool in developing a personalized retirement roadmap.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

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