Gen Xers Are the New Sandwich Generation – Annapolis and Towson Estate Planning

Balancing careers, children, college funds and aging parents present the same-old scenario, but this time to a new generation with a different value system.

Members of Generation X, who straddle a fairly wide age range, from late 30s to early 50s, are feeling the crunch of being responsible for their children and their parent’s needs. How will they ever get a handle on their savings for retirement?

U.S. News & World Report reminds us in its article “Essential Strategies for Generation X” that with the right strategies, Gen Xers can find a money-life balance.

Keep in mind that Gen X has been financially devastated twice: when the tech bubble burst and again during the financial crisis. This makes these individuals dubious about the future.

Let’s look at three strategies for those in the new sandwich generation to help make certain that the financial needs of their aging parents and children are met, and at the same time, ensuring that they don’t sacrifice their own financial future.

For You. Determine your financial health by calculating your net worth. This includes your savings, personal investment accounts, retirement plan accounts, and real estate, minus credit card debts, your mortgage and miscellaneous debt. Take off any items that won’t appreciate or be consumed in retirement, like a car or jewelry. Then review investments to be sure they’re performing consistently with your needs and expectations. Develop a plan to tackle debt and identify existing and projected expenses. Once you have all this information, use a basic retirement calculator to see if you’re on track to meet your retirement spending needs.

A basic calculator probably won’t let you input different scenarios or make detailed assumptions. Most will assume that you will need 70-80% of your current salary in retirement, but this may not be the case if you’re a big saver.

Create a contingency plan for premature death and disability. Ask an attorney to draft your will and other estate planning documents. Make sure that your will includes naming a guardian for your minor children so that you get to name the person who raises them. Have the attorney create powers of attorney and powers of attorney for health care so that you and your partner are prepared for incapacity.

For Your Children. Look at the resources available to fund your children’s education. Don’t put your retirement plan in jeopardy by paying for an expense you can’t afford, including your children’s college. Be open minded about state schools, or having your kids attend a local college for two years, then transfer to another college for a “brand name” diploma.

For Your Parents. See where your parents are financially because you may need to factor unexpected expenses into your plan if your parents need financial assistance. This will save time in the future if you know where to track down this information. Ask if they have an estate plan, and if they do not, have them meet with your estate planning attorney to have a plan created. Find out what kind of long-term care insurance they have in place.

With their somewhat pessimistic outlook—which is not undeserved—many Gen Xers are more focused on a work-life balance than amassing wealth. That’s good, but they need to develop good financial habits on a realistic scale.

Reference: U.S. News & World Report (March 28, 2019) “Essential Strategies for Generation X”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

Why You Need a Plan for Long-Term Care – Annapolis and Towson Estate Planning

Boomers are more willing to plan their own funerals than to prepare for an extended stay in a nursing home. Both are inevitable events for most of us.

With more than 10,000 people celebrating their 65th birthday every day in America and the startling statistic that 70% of us will need long-term care at some point during our lifetimes, it would make sense that more of us would be planning for long-term care. And yet, boomers seem to be more comfortable making plans for a memorial service than they do for a nursing home visit. The cost of long-term care is big and it’s not covered by Medicare. Surprised? So are families when the bill comes.

The Motley Fool’s recent article, “Baby Boomers Are More Prepared for Death Than Life,” says most baby boomers are either unprepared or haven’t planned for a long-term care expense, according to a Bankers Life survey of 1,500 middle-income Americans aged 54 to 72. The results show that baby boomers were more likely to plan for their own death than to have a long-term care plan. About 81% made some kind of funeral arrangements for when they pass away, but just 32% have a plan for how they’ll get care in retirement. The lack of long-term care planning is a significant issue when you compound this with the harm that such a huge unexpected expense has on a person’s retirement savings, especially in cases where a nest egg is small to begin with.

The Department of Health and Human Services believes that the average total cost of care for a retiree is $138,000. However, 79% of the respondents said they have set no money aside for their retirement care needs. For those who do have long-term care savings, the median amount saved is a mere $40,000. Nonetheless, 67% of those surveyed said they know someone who required care in retirement and 36% said they can’t rely as much on friends or family for around-the-clock care. Given all these negative numbers, why aren’t more boomers better prepared? The article gives us three surprising reasons that contribute to this lack of awareness and lack in savings for long-term care:

  1. Overconfidence. Boomers may overestimate their ability to manage future long-term care costs. Three-fourths of those surveyed by Bankers Life said they were confident in their ability to handle future healthcare costs. A misplaced confidence could be why boomers used more effort and money to plan for their deaths. About half of the respondents had fewer than $5,000 saved in an emergency fund and 33% had fewer than $1,000 set aside for emergencies. With the high cost of long-term care and the collective weakness in emergency funds, boomers’ confidence in being able to manage long-term care costs appears unrealistic. These people may be relying on Social Security benefits and Medicare too much.
  2. Lack of basic Medicare understanding. Medicare covers only some long-term care expenses like skilled nursing care after a hospital stay, but there are limits. It also doesn’t pay for custodial or home healthcare. Most of those surveyed believe that Medicare will pay for a future healthcare event and 56% mistakenly identified Medicare as a source to pay for future long-term care.
  3. Not knowing where to get advice. The greatest obstacle to planning for care in retirement is a lack of trust. About a third of boomers surveyed said they need and want advice but don’t know whom to trust. Most seek the help of a family member (36%) and just only 7% ask a health professional. A lack of trust or willingness to seek professional help may lead boomers to either put off a decision or perhaps not fully understanding their planning options.

If you don’t have a long-term care insurance policy in place, the time to get started is now. If your retirement savings accounts can handle it, figure about $138,000 for a nursing home stay. Add in a long-term care insurance policy with premiums that you can manage as another layer of protection. It is better to have a small policy than none at all.

Reference: The Motley Fool (March 27, 2019) “Baby Boomers Are More Prepared for Death Than Life”

Sims & Campbell, LLC – Annapolis and Towson Estate Planning Attorneys

For Immediate Release

Contact: Jane Frankel Sims

410-828-7775

Contact: Frank Campbell

410-263-1667

Sims & Campbell Estates and Trusts

Frankel Sims Law and Holden & Campbell
Merge to Form Sims & Campbell

Firm will offer comprehensive Trusts & Estates services through offices in Towson and Annapolis

TOWSON, Md. (April 26,2019)  Frankel Sims Law and Holden & Campbell have jointly announced the merger of their firms to create a boutique Trusts & Estates law firm providing comprehensive services in the fields of Estate Planning, Estate Administration, Trust Administration and Charitable Giving. The combined firm will be named Sims & Campbell and have offices in Towson, Md. and Annapolis, Md.  Jane Frankel Sims and Frank Campbell will lead and hold equal ownership stakes in the firm.

Sims & Campbell will have 9 attorneys and 15 legal professionals that handle every facet of estate and wealth transfer planning, including wills, revocable living trusts, irrevocable trusts, estate and gift tax advice, and charitable giving strategies.  The firm will focus solely on Trusts & Estates but will serve a wide range of clients, from young families with modest resources to ultra-high net worth individuals.  This allows clients to remain with the firm as their level of wealth and the complexity of related estate and tax implications change over time. 

“By joining forces, we have expanded our footprint to conveniently serve clients in Maryland, D.C. and Virginia” said Jane Frankel Sims.  We are seeing some of the greatest wealth transfer in our country’s history, and we want to continue to be on the leading edge of helping our clients maintain and enhance their family’s wealth.  In addition, we aim to serve our clients for years to come, and the new firm structure will allow Sims & Campbell to thrive even after Frank and I have retired.”    

“Jane and I have always admired each other’s firms and recognized the need to provide even greater depth and breadth of focused expertise to help families amass and protect their wealth from generation to generation,” said Frank Campbell.  “Now we have even greater capabilities to make a real difference for our clients.” 

The Sims & Campbell Towson office is located at 500 York Road, on the corner of York Road and Pennsylvania Avenue in the heart of Towson.  The Annapolis office is currently located at 716 Melvin Avenue, and is moving to 181 Truman Parkway in August, 2019.  For more information, visit www.simscampbell.law.