Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, May 22, 1994 TAG: 9405260038
SECTION: SENIOR STYLE PAGE: 3 EDITION: METRO
SOURCE: By SARAH COX
DATELINE: LENGTH: Long
According to Lee Osborne, a member of Carter, Brown & Osborne, P.C., general practice attorneys in Roanoke, the meat of the planning should be done throughout your working years - investing, saving, risk planning and acquiring a will. But it's never too late.
"A lot of people do not think or plan ahead until they are in their future," said Osborne, whose primary practice areas include tax, estate planning and administration, and general business and transaction work. But, he added, since many people are living well into their 80s and even 90s, financial planning near one's retirement age could still have repercussions for almost an entire generation.
Although retirement often means reduced income, Osborne qualified that by saying most seniors also have reduced debt - their homes and cars are often paid for, they have no college bills or child-rearing expenses. Their biggest concerns are health care and catastrophic needs as well as a focus on estate planning.
The most basic step in financial planning should be done as soon as you are old enough to have a regular job. A will is a necessity because without one you are allowing the state to write a will for you. Beyond that, Osborne said there are about six basic steps in financial planning.
The first is determining your budget, or cash flow, on a personal level. What is your fixed versus your discretionary income? This is often determined by looking at a period of time - six months to a year - for a comprehensive view.
The second step is investing. This involves tailoring a portfolio of investments to suit your tolerance for risk and your immediate and long-term goals.
"Whether you're talking about $10,000 or $1 million, the same concepts apply," said Osborne. "You still have the primary goals of return or safety and a good financial planner will try to get a picture of someone's goals, first."
Risk planning is the third link. This simply means insurance planning, which may change as you approach retirement age. Your flexibility, and your ability to plan for the future change as you grow older, but when you are a senior you should also be asking yourself, "Have I met my goals?" You may be considering long-term care insurance, or weighing that against your income.
Osborne warned that for those who will try to qualify for state benefits, the process is becoming harder and the restrictions are increasing.
Tax planning is the fourth step. You look at tax consequences of your income and determine how to reduce your taxes. Seniors often face taxation of their social security income, and this year, up to 80 percent of their social security income may be taxable. This, of course, will affect the direction of your investments. It's like a puzzle, with all the pieces laying before you but changing shapes constantly. The trick is to make decisions and fit the pieces together smoothly.
The last two steps in financial planning are retirement considerations and estate planning, and by the time you reach retirement it's a bit late to be planning for it.
Estate planning can be involved, depending upon your beneficiaries, whether you are concerned about the length of probate - although, according to Osborne, in Virginia this process is relatively simple and inexpensive. You have other choices to avoid probate, which is the court-supervised administration of the estate. You can leave trusts prior to your death, you can title property in both names or you can make bank account and stocks payable on death to designated beneficiaries. The ability to designate who will be beneficiaries of registered securities, payable upon death, is a new law in Virginia which takes effect July 1.
Again, the ramifications, both tax and personal, of this kind of will must be carefully considered, especially if you have more than one beneficiary. Osborne said that a qualified professional may, in the end, save you money and give you peace of mind.
Often, a bank can be a resource for some of the steps in financial planning.
For instance, the First National Bank, with branches throughout the New River Valley, offers the President's Club for those 50 years old and "better." According to Gloria Anderson, deposit products manager, the benefits of belonging to the club are being able to participate in planned activities and seminars; and receiving a quarterly newsletter, free checks and interest checking, and free traveler's checks.
The seminars offered through the club address concerns such as estate planning, investments, financial planning and health care. Anderson said club members are so concerned with health care issues that last year three Medicare seminars were offered, and this year they've offered two.
Employees from Blue Cross/Blue Shield have helped lead these seminars, and have called upon the expertise of trust officeres and legal counsel from the bank.
Anderson said club members are so concerned with health care issues that last year three Medicare seminars were offered, and this year they've offered two. Employees from Blue/Cross/Blue Shield have helped lead these seminars.
by CNB