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Navigating Life’s Uncertainties: The Importance of Conservatorships, Inspired by Brian Wilson’s Story

In the journey of life, certain events remind us of the importance of planning for the future, especially when it comes to protecting our loved ones and ourselves. The recent news about Brian Wilson, the co-founder of the Beach Boys, is one such event that brings to light the critical role of conservatorships in estate planning.

Understanding Conservatorships

A conservatorship is a legal process where a court appoints an individual or organization to manage the affairs of someone who can no longer do so themselves due to physical or mental limitations. This situation with Brian Wilson, who has been diagnosed with a “major neurocognitive disorder,” likely dementia, exemplifies why having a plan in place is so crucial.

The Story of Brian Wilson

Brian Wilson’s legacy as a musical genius is undeniable. Yet, his personal life now faces significant challenges due to his health condition. After the passing of his wife, Melinda, who was his primary caretaker, Wilson’s family filed for conservatorship to ensure his needs could be adequately met. This step was necessary to safeguard his well-being and manage his affairs, highlighting the unforeseen challenges that can arise as we age.

Key Takeaways

  • Plan Ahead: Brian Wilson’s situation underscores the importance of early planning. Don’t wait for a crisis to think about legal protections like conservatorships.
  • Protect Your Loved Ones: Conservatorships are a vital tool for ensuring the safety and financial security of those who can’t care for themselves. It’s about protection, not control.
  • Expect the Unexpected: Life can be unpredictable. The loss of a caretaker or a sudden health diagnosis can change everything. Having a plan in place provides security in uncertain times.

Conclusion

Life’s unpredictability calls for preparedness and the story of Brian Wilson serves as a powerful reminder of this truth. As we reflect on his contributions to music and culture, let’s also consider the importance of planning for our own future and that of our loved ones. Estate planning, including considerations for conservatorships, is not just about managing assets—it’s about caring for people and ensuring their well-being in every circumstance.

Reference: MarketWatch “Beach Boys’ Brian Wilson’s conservatorship case highlights an important — and sometimes necessary — estate-planning tip.”

How to Protect Your Spouse when Diagnosis Is Dementia

Few illnesses are as terrifying as dementia, for which there is no cure. If estate planning is in place, it may need to be adjusted to address new, more imminent issues. Reviewing the family situation from a legal and financial aspect is critical, and there is no time for delay, explains a recent article from Morningstar, “’I don’t want my wife to lose everything’: I’ve been diagnosed with dementia –I suddenly could not spell or write legibly.”

There are a number of steps to be taken to smooth the path ahead. First is to update your will and create a financial power of attorney. Don’t try to do this without the help of an experienced estate planning attorney.

This may also be the time to reassess your investment portfolio based on your new financial plan and risk tolerance.

An Advanced Healthcare Directive will inform doctors what actions you want them to take when you cannot make those decisions for yourself. You may want to list your wife as your healthcare proxy to carry out these decisions, but be mindful of the pressures put on a marriage when serious healthcare issues occur. Your spouse will need emotional support as well, and you’ll want to have a successor to your spouse for both the healthcare and POA documents.

Share your situation with trusted family and friends to create a team–a community of people who can provide support, part of which will be updating beneficiaries. Now would also be the time to record instructions for access to devices, documents, and even daily habits.

Long-term care insurance will help with expenses and should serve as an example for anyone reading this article. Policies should be purchased early in life when they are relatively affordable to help alleviate the financial burden of nursing home costs.

An estate planning attorney and financial advisor will help you take an accounting for assets, expenses, and projected long-term care costs. You’ll want a team approach to provide as much guidance as possible.

When to put your long-term care policies into payout status is a difficult decision. You’ll need to time this with a Medicaid plan, which your elder law estate planning attorney will be able to help with.

Now may also be the time to create a trust and divest assets to make it through the five-year Medicaid look-back, using your long-term care policy in the next five years.

There are exceptions to the five-year look-back rule for Medicaid eligibility. They include paying off debts, buying medical devices, or making home improvements to improve accessibility. However, eligibility depends upon income and other assets.

Some states, including Florida and New York, have rules exempting homes from assets calculated by Medicaid under certain circumstances. California eliminated an asset limit this year, making a person’s home automatically safe from Medicaid while they are living, but this does not mean it’s exempt from the Medicaid Estate Recovery Program.

Working with a team of professionals, including an estate planning attorney, and having the support of family and trusted friends will be important as time goes by and the disease progresses.

Reference: Morningstar (Feb. 25, 2024) “’I don’t want my wife to lose everything’: I’ve been diagnosed with dementia –I suddenly could not spell or write legibly”

Prevent Difficulties in Probate with Advance Planning

If you think gathering your papers, passwords, logins, account information and estate planning documents is a challenging task, consider your heirs trying to do it after you’ve passed and while they are grieving your loss. By preparing all the information they’ll need, you’ll make their inheritance process as easy as possible, says a recent article from Next Avenue, “6 Ways To Save Your Heirs from a Painful Probate.”

A List of Passwords for Hardware, Online Accounts and More Our cellphones, tablets, computers, online accounts and other technology all hold important information. If your executor tries to access information and accounts, they’ll need more than your passwords. If you have accounts with two-factor authentication, for instance, they’ll need to be able to access your email and/or cellphone to access other digital assets. The list should include things like social media usernames and passwords. The information must be kept somewhere safe where a spouse or executor can find it. Some tech platforms allow you to name a legacy contact with the right to access accounts after you pass. A password manager system might be helpful. However, this may add another layer of frustration for non-technical people.

List All Assets and Accounts with Contact Information. Whether you use a spreadsheet or a notebook, this is crucial information. Make sure to include investment accounts, checking and savings accounts, 401(k)s, IRAs, pension accounts, brokerage accounts, etc. Provide contact information for your estate planning attorney, accountant and financial advisor.

The information must be well organized because it will be a lot of data. Your executor will also need the accounts for running your household, paying utilities, mortgage, cable, etc. The same goes for health insurance, Medicare or Medicaid information, life insurance policies, car insurance and deeds to your home and car.

Tell the Executor and/or Heirs Where Your Information is Located. One estate planning attorney reports receiving a few monthly calls from grieving heirs who have no idea where the estate planning documents are, who takes care of the financial accounts, or how to access these accounts. Sometimes, the calls come from people who aren’t even clients but are hoping there might be some special resource known to estate planning attorneys to provide this information. There is no such thing.

Plan for the Unexpected A significant part of estate planning is planning for financial and healthcare decisions while you are still living. A living will details whether or not you want to be kept alive by heroic or artificial means, and a power of attorney authorizes someone to make decisions on your behalf. Without a POA, the person may recover from their medical emergency to find a financial mess of late bills, missed insurance premiums, or a host of issues that could have been dealt with on their behalf. Without healthcare surrogate documents and discussions of your wishes in difficult health situations, the family will need to make difficult healthcare decisions in highly stressful situations.

If the proper documents are not in place, the family must go to court to have someone named a guardian, who can then make health care decisions for you. The same process will be needed to have someone manage your financial affairs, called conservatorship. These are expensive and invasive court processes that can easily be avoided.

Talk with your estate planning attorney and family members to plan for the future. You’ll all feel better knowing that you’ll all be prepared when difficulties arise.

Reference: Next Avenue (Jan. 9, 2024) “6 Ways To Save Your Heirs from a Painful Probate”

Life Insurance and Estate Planning

The Importance of Incorporating Life Insurance into Your Estate Plan

Life insurance is a pivotal component of a comprehensive estate plan. Integrating life insurance policies into estate planning can provide financial security for your heirs and ensure that your estate is distributed according to your wishes. When used effectively, life insurance can solve a range of estate planning challenges, from providing immediate cash flow to beneficiaries to helping cover estate tax liabilities.

Incorporating life insurance into your estate plan requires careful consideration of the type of policy that best suits your needs, whether term life insurance for temporary coverage or whole life insurance for permanent protection. It’s essential to understand the insurance company’s role in managing these policies and ensuring that they align with your overall estate objectives.

How Can Life Insurance Be Used in Estate Planning?

Life insurance can play a crucial role in estate planning. It can provide a death benefit to cover immediate expenses after your passing, such as funeral costs and debts, thereby alleviating financial burdens on your heirs. Furthermore, life insurance proceeds can be used to pay estate taxes, ensuring that your beneficiaries receive their inheritance without liquidating other estate assets.

When selecting life insurance for estate planning purposes, it’s important to consider the different types of policies available, such as term insurance for short-term needs and permanent insurance for long-term planning. An insurance agent can be a valuable resource in this process, helping to determine the right policy type for your estate planning goals.

Choosing the Right Beneficiary for Your Life Insurance Policy

Designating the appropriate beneficiary is crucial in using life insurance for estate planning. The beneficiary should align with your overall estate plan, ensuring the death benefit supports your intended estate distribution. Reviewing and updating your beneficiary designations regularly is vital, especially after significant life events like marriage, divorce, or the birth of a child.

Heirs named as beneficiaries will receive the insurance death benefit directly, which can provide them with immediate financial support and help them manage any inheritance or estate inheritance they receive from your other assets.

The Role of Life Insurance Trusts in Estate Planning

Life insurance trusts, particularly irrevocable life insurance trusts (ILITs), play a significant role in estate planning. By placing a life insurance policy within a trust, you can exert greater control over how the death benefit is distributed among your beneficiaries. The trust owns the policy, removing it from your taxable estate and potentially reducing estate tax liabilities.

An irrevocable trust is especially beneficial since it ensures that the proceeds from the life insurance policy are used according to the terms you’ve set, such as funding a trust for a child with special needs or providing for a specific heir.

The Benefits of Irrevocable Life Insurance Trusts

An irrevocable life insurance trust (ILIT) offers several benefits in estate planning. Since the trust is irrevocable, it provides a layer of protection against creditors and legal judgments, ensuring that the life insurance payout is used solely for the benefit of your designated beneficiaries.

Setting up an ILIT requires careful planning and adherence to legal guidelines. The trustee you appoint will manage the trust and oversee the life insurance death benefit distribution according to your specified terms.

Estate Planning with Different Types of Life Insurance

Understanding the different types of life insurance is crucial in estate planning. Term life insurance offers coverage for a specified period and is often used for short-term estate planning needs, such as providing financial support to minor children. On the other hand, permanent life insurance policies, like whole life or universal life insurance, offer lifelong coverage and can build cash value over time, which can be an asset in your overall estate.

When considering life insurance in estate planning, it’s important to evaluate how the death benefit of a life insurance policy will impact your estate’s overall financial picture and the inheritance your heirs will receive.

Life Insurance and Federal Estate Tax Considerations

Life insurance can be a strategic tool in managing federal estate tax obligations. The proceeds from a life insurance policy are typically not subject to federal income tax. However, they can still be included in your gross estate for estate tax purposes, depending on the ownership of the policy.

To minimize estate tax impact, you might consider establishing an irrevocable life insurance trust, which removes the policy from your taxable estate. This strategy can be particularly effective in estates approaching or exceeding the federal estate tax exclusion limit.

How Life Insurance Can Help Pay Estate Taxes

One of the primary uses of life insurance in estate planning is to provide funds to pay estate taxes. This is especially relevant for larger estates that may face significant federal and state estate taxes. The death benefit from a life insurance policy can be used to cover these taxes, ensuring that your heirs do not have to liquidate other estate assets to meet tax obligations.

In planning for estate taxes, working with professionals, such as estate attorneys and tax advisors, is essential to ensure that your life insurance coverage aligns with your anticipated tax liabilities.

The Role of Life Insurance in Providing for Heirs and Beneficiaries

Life insurance can offer substantial financial support to your heirs and beneficiaries upon your passing. Whether providing for a spouse, children, or other dependents, life insurance can ensure that your loved ones are cared for financially. This is particularly important in cases where other estate assets are not readily liquid or if you wish to leave a specific inheritance to certain beneficiaries.

When selecting life insurance for this purpose, consider the needs of your heirs, their ability to manage a large sum of money and how the death benefit will complement other aspects of your estate plan.

Summary: Key Points to Remember in Life Insurance and Estate Planning

  • Life Insurance as a Financial Tool: Understand the different types of life insurance and how they fit into your estate plan.
  • Beneficiary Designations: Regularly review and update your beneficiary designations to align with your estate planning goals.
  • Life Insurance Trusts: Consider using irrevocable life insurance trusts to control the distribution of your life insurance proceeds.
  • Federal Estate Tax Planning: Utilize life insurance to address potential estate tax liabilities, especially in larger estates.
  • Providing for Heirs: Choose the right life insurance policy to ensure that your heirs are financially supported according to your wishes.

In conclusion, life insurance plays a vital role in comprehensive estate planning. By carefully selecting the right type of policy, designating appropriate beneficiaries and considering the use of trusts, you can ensure that your estate plan effectively addresses your financial goals and provides for your loved ones after your passing.

Navigating the Financial Journey to a 100-Year Life

In an era where living to 100 is becoming increasingly likely, financial planning for retirement takes on a new level of complexity. The Yahoo Finance article, “Retirement Planning: Here’s How Much You’ll Need To Save If You Live to 100”, offers a comprehensive look at this challenge, highlighting the need for a radical shift in our approach to life and financial planning.

Understanding the Longevity Revolution

The “longevity revolution” concept discussed by Laura L. Carstensen, director of the Center for Longevity, suggests a significant societal shift. This revolution impacts various aspects of life, including health care, personal finance and retirement planning. Adapting to this change requires a thorough understanding and strategic planning.

The 80% Rule of Thumb for Retirement Savings

A commonly accepted guideline is that retirees will need about 80% of their pre-retirement income to maintain their lifestyle. This translates to a significant sum for an average American wage earner, necessitating diligent saving and investment strategies.

Detailed Breakdown of Retirement Costs

Food Costs

Over a 35-year retirement period, food costs can accumulate significantly. Based on Bureau of Labor Statistics (BLS) data, these expenses can reach upwards of $167,895, which demands careful budgeting and planning.

Healthcare Costs

Healthcare is a major expense in retirement. With fluctuating Medicare premiums and additional out-of-pocket expenses, the estimated healthcare costs over 35 years can exceed $263,900. This figure underscores the importance of planning for higher healthcare costs in later life.

Housing Costs

Housing expenses vary greatly depending on whether one stays home or moves to an assisted living facility. While staying in a paid-off home can be more cost-effective, the potential need for long-term care can significantly increase these costs.

Incidental and Discretionary Spending

Retirement isn’t just about covering basic needs. It also includes transportation, entertainment and other lifestyle expenses. Over 35 years, these costs can amount to around $506,905, highlighting the need for a comprehensive budget that includes leisure and lifestyle expenses.

Total Retirement Cost Estimation

Adding up these expenses, the total cost of living 35 years in retirement is estimated to be around $1,756,370. This figure is a stark reminder of the financial demands of a long retirement period.

Income Sources in Retirement

Social Security benefits play a crucial role in retirement income. However, they must often be supplemented with personal savings and investments to cover the total estimated costs. Effective financial planning and investment strategies are crucial to bridge this gap.

Strategies for Effective Retirement Planning

Saving Strategies

Saving 15% of income and employing automated savings plans can bolster retirement funds. Starting early and being consistent is key to building a substantial nest egg.

Preparing for Near-Retirement

For those nearing retirement age with insufficient funds, exploring ways to boost income, pay off debts and cut costs is crucial. Every dollar saved or earned can make a significant difference.

Adjusting Lifestyle and Spending

Managing expenses and lifestyle to fit retirement income is vital. This may involve making tough choices about spending and lifestyle to ensure financial stability in the later years.

Conclusion

The prospect of a 100-year life brings the challenge of ensuring financial stability in retirement. Early and effective planning is essential, guided by a clear understanding of the costs involved and the income needed. As we navigate this new era of longevity, adapting our financial strategies will be vital to enjoying a comfortable and secure retirement.

References

For more detailed insights and data, refer to the original Yahoo Finance article: “Retirement Planning: Here’s How Much You’ll Need To Save If You Live to 100”.

Protecting Elderly Parents

As our parents age, the responsibility often falls on us to ensure their well-being and safety. This article delves deep into the various ways you can protect your elderly parents, especially in the realms of finance, health and overall security. With the rise of scams targeting the elderly and the challenges of dementia, it’s crucial to be proactive. Read on to discover actionable steps and essential knowledge to safeguard your loved ones.

How to Start the Conversation with Your Elderly Parent?

Starting the conversation about their safety and well-being can be challenging. It’s essential to approach the topic with sensitivity and understanding. Listen to your parents’ concerns and feelings. Remember, it’s not about taking control but about ensuring their safety and well-being. Ask your parents about their wishes and how they envision their future.

What are the Warning Signs of Financial Exploitation?

Elder financial abuse is a growing concern. Be vigilant for warning signs such as sudden changes in financial situation, unexplained withdrawals, or new relationships with “financial advisors.” Regularly reviewing credit reports can also help in spotting unauthorized activities. Elderly people are often targeted, so it’s essential to be proactive in protecting elderly parents’ assets.

Why Is an Estate Plan Important?

An estate plan ensures that your elderly parent’s assets are distributed according to their wishes. It includes legal documents like wills, living trusts and power of attorney (POA). Establishing a living trust can be particularly beneficial since it provides clarity on asset distribution and can avoid probate. Estate planning also helps in protecting elderly parents’ assets.

How to Protect Your Elderly Parent from Scams?

Scams targeting the elderly are rampant. Educate your parents about common scams, and emphasize the importance of not sharing personal information. Regularly check their financial accounts for suspicious activities and sign your parents up for free credit report monitoring. Elder financial abuse is real, and taking steps to protect your elderly parents’ assets is crucial.

Dementia: How to Recognize and Manage?

Dementia can be a significant concern for aging parents. Early signs of dementia include forgetfulness, confusion and difficulty in performing familiar tasks. If you notice these signs, consult a medical professional. Establishing a durable power of attorney can also help in managing their finances and health decisions. Cognitive decline is a common issue, and understanding the early signs of dementia can be beneficial.

The Role of Legal Documents in Protecting Elderly Parents

Legal documents like POAs, living trusts and wills are essential tools in protecting your elderly parents’ assets and ensuring that their wishes are honored. Consult an elder law attorney to understand the best options for your family. Legal documents play a pivotal role in protecting elderly parents’ assets.

How to Help Your Parents Manage Their Money?

If your parents have trouble managing their money, offer to help them set a budget, pay bills and review their financial accounts. Setting up automatic payments for regular bills can also ensure that they don’t miss any payments. Money management is crucial, and helping them manage their finances can provide peace of mind.

What Is Elder Law, and Why is it Important?

Elder law focuses on the legal needs of the elderly. An elder law attorney can guide you through legal processes, ensuring that your parents’ rights are protected and their wishes are respected. Elder law is a specialized field that can assist in protecting elderly parents’ finances.

How to Ensure Your Parents’ Financial Security?

Protecting elderly parents’ assets is crucial. Work with a financial planner to review their financial situation, set aside money for emergencies and invest wisely. Ensure that their retirement accounts are secure, and regularly review their financial accounts for any discrepancies. Financial security is paramount for the well-being of your aging parent.

How to Financially Protect Your Elderly Parents?

To financially protect your parents, ensure that they have a solid estate plan, regularly review their financial accounts and educate them about potential scams. Establishing a living trust and having a power of attorney can also provide added security. Financial decisions made today can have long-term implications, so it’s essential to be informed and proactive.

Key Takeaways:

  • Start the conversation with your parents early and with sensitivity.
  • Be vigilant for signs of financial exploitation and scams.
  • Legal documents like POAs, living trusts and wills are essential in protecting assets.
  • Consult professionals, like elder law attorneys and financial planners, for expert advice.
  • Regularly review and manage your parents’ financial accounts to ensure their security.
  • Understand the challenges of dementia and be proactive in its management.
  • Financial security is paramount for the well-being of your aging parent.

What Is a Letter of Instruction?

A letter of instruction can be an essential component of your estate plan. Regardless of your wealth and family situation, there is vital information you should organize and communicate to loved ones, heirs, fiduciaries and others, says Forbes’ recent article entitled, “Letter Of Instruction: Roadmap To Take This Important Estate Planning Step.”

Some people see their letter of instruction as an ethical will—a communication to their family that expresses their beliefs, wishes, wisdom and thoughts. However, a letter of instruction may serve other purposes. Therefore, you might consider drafting several letters of instruction. One might be a guide for a trusted friend to handle financial and other matters if you have an emergency. Another may be akin to an ethical will left to a child or others. A third might be to the person serving as a health care agent who will make medical decisions for you if you can’t do so.

Here are some suggested categories you might include in one or all of your letters of instruction.

ICE – In Case of Emergency. A vital purpose of a letter of instruction is to tell someone (e.g., the agent under your power of attorney for financial matters and the agent under your health proxy for medical decision-making) your wishes and critical information. For both your financial and health care ICE letters, you should list the location of the original legal documents.

ICE – In Case of Financial Emergency. For your financial ICE letter, you should indicate where key financial data is maintained and how to access it. In addition, list the bills to be paid and creditor information.

ICE – In Case of Health Care Emergency. For your health care ICE letter, you should provide key health information and indicate where health records are maintained. It is important to add the contact information for healthcare professionals and any particular health challenges. Your health insurance information should also be provided.

Key Family, Advisers, and Other People. Having a list of positions, names and contact information is helpful for everyone to see, so that they know if certain actions they might have to take may be in the purview of someone else. The listing should be by categories that make sense for you. Some of the positions/relationships you might list include the following:

  • Professional Advisers, such as an estate planning attorney, CPA, investment consultant and banker
  • Family; and
  • Trustees of trusts, the executor under your will, and powers of attorney agents

Reference: Forbes (June 18, 2023) “Letter Of Instruction: Roadmap To Take This Important Estate Planning Step”

Use Estate Planning to Prepare for Cognitive Decline

Since 2000, the national median age in the U.S. has increased by 3.4 years, with the largest single year gain of 0.3 years in 2021, when the median age reached 38.8 years. This may seem young compared to the life expectancies of older Americans. However, the median age in 1960 was significantly lower, at 29.5 years, according to the article “Don’t Let Cognitive Decline Derail Well-Laid Financial Plans” from Think Advisor.

An aging population brings many challenges to estate planning attorneys, who are mindful of the challenges of aging, both mental, physical and financial. Experienced estate planning attorneys are in the best position to help clients prepare for these challenges by taking concrete steps to protect themselves.

Individuals with cognitive decline become more vulnerable to potentially negative influences at the same time their network of trusted friends and family members begins to shrink. As people become older, they are often more isolated, making them increasingly susceptible to scams. The current scam-rich environment is yet another reason to use estate planning.

When a person is diagnosed with Alzheimer’s or any other form of dementia, an estate plan must be put into place as soon as possible, as long as the person is still able express their wishes. A diagnosis can lead to profound distress. However, there is no time to delay.

While typically, the person may state they wish their spouse to be entrusted with everything, this has to be properly documented and is only part of the solution. This is especially the case if the couple is close in age. A secondary and even tertiary agent needs to be made part of the plan for incapacity.

The documents needed to protect the individual and the family are a will, financial power of attorney, durable power of attorney and health care documentation. In addition, for families with more sophisticated finances and legacy goals, trusts and other estate and tax planning strategies are needed.

A common challenge occurs when parents cannot entrust their children to be named as their primary or secondary agents. For example, suppose no immediate family members can be trusted to manage their affairs. In that case, it may be necessary to appoint a family friend or the child of a family friend known to be responsible and trustworthy.

The creation of power of attorney documents by an estate planning attorney is critical. This is because if no one is named, the court will need to step in and name a professional guardian. This person won’t know the person or their family dynamics and may not put their ward’s best interests first, even though they are legally bound to do so. There have been many reports of financial and emotional abuse by court-appointed guardians, so this is something to avoid if possible.

Reference: Think Advisor (April 21, 2023) “Don’t Let Cognitive Decline Derail Well-Laid Financial Plans”

What’s the Most Common Debt for Retirees?

A recent survey of about 2,000 American retirees between the ages of 62 and 75 found many of them burdened with debt.

Some likely ran out of time to pay off their debts before retiring. Others may have entered the red or simply deepened their debt level after leaving work.

Money Talks News’ recent article entitled “This Is the Most Common Debt Among Retirees — by Far” provides the most common type of debt retirees report — along with other debts that are part of retirement for many people.

  1. Credit card debt. Retirees who said they had this type of debt in 2022 was 40%, compared to 42% in 2020. Credit card debt is almost always expensive, but it’s much worse if you don’t have a regular paycheck to help you pay bills.
  2. Mortgage. Retirees who said they had this type of debt in 2022 was 30%, with no report for 2020. A home loan is one of the few types of borrowing that can be classified as “good debt.” Many experts suggest paying off a mortgage before retirement. but others argue against such a strategy.
  3. Auto loans. Retirees who said they had this type of debt in 2022 was 23%, and in 2020, it was 30%. Unless you saved a bunch, an auto loan is hard to avoid, retired or not. As a result, about a quarter of retirees still are paying off this type of loan.

Retirees said they also are carrying these types of debt in 2022:

  • Medical debt: 11%
  • Home equity loan: 7%
  • Student loan: 4%
  • Business loan: 1%

Reference: Money Talks News  (Jan. 9, 2023) “This Is the Most Common Debt Among Retirees — by Far”

What’s the Most Common Type of Debt for Retirees?

The goal of beginning your retirement in the black is admirable, the reality can be quite different.

Money Talks News’ recent article entitled “Sadly, This Is by Far the Most Common Debt Among Retirees” reports that a recent survey of 1,998 American retirees between the ages of 62 and 75 found that many retirees have debt.

Some likely ran out of time to pay off their debts before retiring, and others may have entered the red or simply deepened their debt level after leaving work.

Whatever the reason, these are the most common types of debt that retirees report — along with other debts that are part of retirement for many people.

  1. Credit card debt. A total of 40% of retirees said they had this type of debt in 2022, compared to 43% in 2020.

Credit card debt is almost always expensive, but it’s much scarier when you do not have a regular paycheck to help you pay bills.

  1. Mortgage. Retirees who said they had this type of debt in 2022 was 30% and is not available for 2020.

A home loan is one of the few types of borrowing that can be classified as “good debt.” Some experts say paying off a mortgage before retirement is advisable, but others argue against such a strategy.

  1. Car loans. Retirees who said they had this type of debt in 2022 was 23%, compared to 30% in 2020.

Unless you have a lot of money in savings, an auto loan is hard to avoid — whether you are retired or not. Therefore, it makes sense that nearly a quarter of retirees are still paying off this type of loan.

  1. Less common types of debt. Retirees said they’re also carrying these types of debts in 2022:
  • Medical debt: 11%
  • Home equity loan: 7%
  • Student loan: 4%
  • Business loan: 1%

Reference: Money Talks News (Oct. 20, 2022) “Sadly, This Is by Far the Most Common Debt Among Retirees”

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