Talking Turkey About Aging and Retirement
If you are sitting down with the older and younger generations of your family this Thanksgiving, give some serious thought to discussions about the future. How are the older members of your family faring? What needs to be done about their future living, health, and financial plans? These discussions should be supportive and caring, but family tensions often make them stressful and negative.
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Here are five topics to consider raising at the appropriate time during this holiday period:
Medicare. The government has changed the annual enrollment rules and time period for signing up for next year's Medicare coverage. Instead of having until the end of the year to make this important healthcare decision, the new enrollment period will end December 7. This change should allow insurers to have their 2012 Medicare plan details fully in place by the end of this year. That's an improvement over past years, but surveys find that many seniors and their families are still unaware of the time shift.
There also are changes to many Medicare plans next year. The health reform law is continuing to affect Medicare, providing more federal subsidies for drug prices and an extensive array of free medical services. Average premiums for Medicare Advantage and prescription drug policies will be lower in 2012 than this year. But there can be changes in "fine print" areas such as plan deductibles, co-pays, and prices for specific drugs. Spending some time reviewing your plan to make sure it still meets your needs may not be your first choice of how to relax after a big Thanksgiving meal, but don't wait too long before doing so.
Estate plans. For those fortunate to have substantial wealth, discussions about estate plans and charitable giving are very timely. The estate rules are particularly attractive right now, and it's not clear if Congress will keep them in place. For the next two years, up to $5 million in assets are exempt from estate taxes ($10 million for a married couple), but this exemption is set to fall to $1 million at the end of 2012 if Congress does not act.
[See Estate Plans Reeling from 'Volatility Fatigue'.]
Charitable giving. The large $5 million estate-tax exemption also applies to gift taxes, which might explain why some families are receiving extra-special notes these days from their favorite charities. In addition, there is a temporary rule that allows people at least 70½ years old to donate up to $100,000 to charities from their tax-deferred retirement accounts. Normally, asset sales in these accounts trigger income-tax payments, but these donations can be made tax-free to both donor and tax-exempt charities. So, if you are truly in the giving spirit, and have appreciated securities that would normally be subject to a big tax bill when sold, you might consider this opportunity. Also, it expires at the end of 2011, so time is short.
End-of-life directives. Many families would rather give up their Turkey Day altogether than sit down and talk about these sensitive issues. But for aging parents and their grown children, the time to review these matters is before a serious physical or mental illness occurs. Of course, we can't know for sure when that will happen, and hopefully it never will. But seniors should sit down with younger family members and talk about their wishes. The power to make legal and medical decisions should be conveyed to a younger decision maker, and that person needs to know what the senior wants done in the event of a medical emergency or if the senior becomes incapacitated and cannot make an informed decision about their care.
[See 10 Tips for Caring for Aging Parents.]
Downsizing. Disposing of possessions in later years can be physically taxing and emotionally devastating. Even when the mind says certain things are no longer needed, the heart may associate them with children long since grown and other precious family memories. Talking about what to do with these material things can be a healthy way of setting the stage for household downsizing. Ideally, other family members would want to take the items that older parents feel should "stay in the family." Increasingly, digital images can provide a way to keep a good memory alive while parting with the physical thing that triggers it. Creating a visual archive of an older parent's possessions could be a priceless gift, and also one that helps a loved one move into a new chapter of their life.
Twitter: @PhilMoeller
