Five Things to Do Before You Retire

Retirement is an exciting prospect for many people, but seldom does anyone truly prepare for their golden years. The following five tips will help you ensure that you are ready to say goodbye to the workplace and hello to the best years of your life.

Decide How Much Health Insurance to Buy       

In the event that you’ve had health insurance through your employer, there’s a chance that you may be able to continue it after your retirement. However, if this isn’t an option or if it will be too expensive for you to continue under the same plan, then you might need to seek out other options. You’ll be eligible for Medicare at age 65 but, for many people, this coverage is simply not enough. You should weigh your options, consider your current state of health, and purchase a plan that won’t break your budget.

Create a Last Will and Testament

This can be a difficult prospect for some people, but it’s something that needs to be done nonetheless. Here, you’ll want to consider how much life insurance you have (and you’ll also want to purchase some if you haven’t yet) and how it will be divided among your family and loved ones after your death. You will also want to declare how your physical property – including any real estate you own – should be handled. Finally, make sure that you include a ‘living will’ which is a declaration regarding whether you want life support or even CPR in the event of a medical issue.

Finish Paying On Your Mortgage

More than likely, your mortgage (if you have one) is your biggest expense. You’ll want to make sure that you’ve paid this off, and if you can’t pay it off altogether, you can also look into refinancing so that you can receive a lower monthly payment. Another option is the reverse mortgage, but this is something that many people don’t fully understand. After your death, if you are the only person living in that home and the only name on the title, then your home will be possessed by the bank that provided the loan.

Check Pensions and 401(k) Plans

A lot of people rely on their pensions and their 401(k) savings after retirement, but few people actually understand how much they’ve saved or what will be provided to them. If you’re considering early retirement, keep in mind that your pension is likely to change drastically. Similarly, in the event that you attempt to withdraw funds from your 401(k) plan early, you’ll be penalized for that, as well.

Host a ‘Trial’

Once you’ve gotten all of your affairs in order, one of the best ways to make sure that you’re prepared for your retirement is to live as if it’s already occurred for a period of two to three months. Stick to your budget and your plan, and if something seems amiss, make an adjustment. This way, you’ll know exactly what you can expect and exactly what you’ll need to do to get there.

Preparing for retirement is a task that takes decades to perfect, but even if you’re behind in the process there are still some things you can do. Considering your insurance policies, pensions and more will not only help you live comfortably, but it will ensure that your loved ones will be cared for after your passing. 

Disaster Scams and How to Avoid Them

As if being involved in a disaster like a fire, hurricane or tornado were not enough, there are people out there waiting to prey on those who have fallen victim. The following disaster scams have been reported nationally with some of the most recent coming in the wake of hurricane Sandy.

Why Victims Fall Prey

Think about this: when someone is involved in a disaster like the ones mentioned above, the first thing they think is that they need help – and they need it fast. Oftentimes, these people are so upset that they don’t take the time to check the qualifications of the companies who offer their help. As such, there are instances of ‘fake’ construction companies and cleaning crews accepting checks for work that they never intend to perform, cases of identity theft, and even false charities claiming to take up funds from people who weren’t even involved in the disaster. This turns the common consumer into a victim, as well.

Identity Theft

After a major disaster, a group called FEMA, or the Federal Emergency Management Agency, often takes information from those affected in order to provide relief funds and other aid. Con artists will often go door-to-door claiming to work for FEMA in order to gather your personal information for a purpose that is much more sinister. Please keep in mind that following a disaster, FEMA agents will never come to you and ask you for your information. You must contact them directly through an authorized telephone number or website.

Fake Charities

Following a disaster or crisis, crooks will often set up fake charities and promise that all of the proceeds collected will go to the victims. In all actuality, the only place those funds go is right into the pockets of the con artist. Before donating any sum of money to any charity – whether it is $5 or $500 – please be sure that you research it thoroughly. Never simply assume that someone is working for the Red Cross just because they say so; rather, take the time to do your research. Should you choose to donate to the Red Cross, you can do so through their website or by calling their official toll-free number.

False Victims

In contrast to the fake charity scam, there are some folks who will pretend to be victims of a disaster in which they were never even involved. People have gone so far as to say that their husbands, wives or children were killed although they never even existed in the first place. Although these stories may tug on your heartstrings, it’s important to remember that con artists are out there. It is better to donate to legitimate charities or even work directly with someone you know personally if they were affected by the disaster in any way.

While many of us don’t want to believe that someone could be cruel and heartless enough to take advantage of a disaster-ravaged community, it certainly can and does happen. Protecting yourself against these scams is the absolute best thing you can do to protect yourself. 

Teenage Drivers and Parental Liability

If you have one or more teenage drivers in your household, then it is important for you to understand your potential financial and legal liabilities in the event that he or she is at fault in an auto accident. Parental liability is a serious issue that everyone should understand prior to allowing a child onto the roadway with other drivers.

Are You ‘Off the Hook’?

One of the biggest mistakes that the parents of new drivers make involves buying the teen a car, putting the car in the teen’s name, and then allowing the child to purchase his or her own insurance. At this point, the parents often truly believe that they are off the hook in the event that their children are involved in accidents that are determined to be their fault. However, this is absolutely not the case. Children who are not yet 18 years old are not legally capable of accepting such liability and this means that the liability falls back on the parents.

A Frightening Example

Ethan Couch, a teenager living in Texas, made national headlines when a drunken crash killed four people. His defense was that he was suffering from ‘affluenza’, or a condition in which it is claimed that wealthy children are prone to feelings of isolation, depression and guilt. Couch claimed that the affluenza led to his drinking and therefore the crash. The judge in the case agreed with the defense and the teen was officially off the hook, but the attention then turned to the parents who were charged with negligence. In fact, they are involved in no less than five civil suits due to incidents involving negligence in the supervision and care of their son.

How Does This Happen?

If your child is involved in an accident in which someone is hurt or killed, the victims do have the right to file a suit claiming negligence. However, in order for you to actually be charged, certain factors have to exist. For example, if your child has received several speeding tickets and is involved in an accident because he or she is driving at a high rate of speed, then a judge could very well rule that you ‘should have known’ such an accident was imminent. The same can be said if you make both alcohol and car keys accessible to a teenage driver.

What Should You Do?

If you’re wondering whether or not you should even let your kid out of the house with the car keys at this point, rest assured that there are some things you can do to protect your child and yourself. First and foremost, it is your duty as the head of household to determine whether or not your child is fit to drive. If he or she has shown serious lack of responsibility or negligence in the past, handing over the keys may not be such a good idea after all. It is up to you as the parent to make the final decision and exercise your best judgment before allowing your child onto the roadways.

Of course, it is also important to discuss your parental liability with your child prior to allowing him or her to drive. This can be incorporated into conversations about texting behind the wheel, drinking and driving, or any other issue that is a concern. 

Accelerated Benefit Riders for Life Insurance Policies

If you have a life insurance policy but you’re concerned about what might happen if you are diagnosed with a chronic or critical illness that involves long-term care, then an accelerated benefit rider may be a great option. Essentially, it may allow you to access your death benefit prematurely in the event of situations like these.

How it Works

There are several things that are used to determine whether or not an accelerated benefit rider is a good option. For instance, with some companies, these benefits are included in every life insurance policy at no additional cost. In others, it must be an addition to the original policy, but it doesn’t cost much annually. Then, if the policyholder becomes ill and needs long-term care, a portion of his or her death benefit will be paid out prematurely in an effort to help cover the costs.

Receiving the Benefits

Individuals cannot simply contact their life insurance providers on their own and request a partial payment of their benefits. In most cases, a notification of a terminal or severe chronic illness must be sent to the insurance company by a licensed, practicing physician. At this point, the insured may be asked to undergo some further tests performed by doctors that work for the insurance company directly. Once it has been determined that there is a serious illness, a portion of the benefits will be provided to the insured.

Conditions and Maximum Payments 

The portion of the value of the policy that can be paid out prematurely depends upon several factors, but the one with the most influence is the insured’s overall life expectancy. Many insurance companies will not put the rider into action unless a physician has stated that the insured has a life expectancy of between six and 12 months. Then, a portion that is a minimum of 25% and a maximum of 75% of the overall benefit can be paid early to help cover the costs of medications, medical bills and even hospice care. Most of the time, the maximums allowable are between $250,000 and $500,000.

Things to Consider

Before making use of an accelerated benefit rider, policyholders and their families should be aware that any amount that is provided to them prematurely will be treated like a whole life insurance policy loan. The amount will be subject to fees and any interest that accrues up until the time of the insured’s death. It is also important to consider that different insurers have different terms and conditions associated with these riders, so those who are considering them should take the time to shop around for the best overall value.

An accelerated benefits rider can help you if you are diagnosed with a terminal or chronic illness at some point in your life. While it is better to be prepared than to face such a financial crisis alone, there is always the possibility that you will never need to use the rider and that your family will receive your death benefit in its entirety.