Category Archives: Asset Proection

Information regarding asset protection.

Seniors Flunk a New Retirement Quiz

Most seniors who took a retirement quiz did not score high.

Not long ago I wrote on a Wall Street Journal debate where one side said there is no retirement crisis and the other said there was.  My point was that neither party addressed the potential need for long-term care and increasing medical expenses.  Had this fact been addressed, I doubt anyone could conclude there is no retirement crisis in America.

Now the American College of Financial Services released the results of its Retirement Income Literacy Quiz.  The results were sobering and add just one more pillar to the argument that we do have a retirement crisis:  Nearly 75% of the 1,244 adults ages 60 to 75 who were interviewed online for the test got a big fat F (a score of 60% or less), while fewer than 6% received an A (91% or better) or a B (81% to 90%).  The results show that many people are woefully uneducated about investing and planning for retirement.  Without revealing my actual score, thankfully I fall into the “fewer than 6%” category.

The American College test is challenging, consisting of 38 multiple-choice questions on virtually every aspect of managing one’s finances in retirement.  As with many multiple-choice tests, the questions aren’t always worded in a way to produce a clear answer, but alas with generally five options to choose from, you have to select a “definitive” answer.

The questions pretty well cover the main topics you’d want to have a handle on to plan for a secure retirement.  They include:

  • the maximum amount you can safely draw from your nest egg if you want it to last 30 years
  • the right age to claim Social Security if you expect to live a long life
  • which expenses are covered by Medicare and long-term-care insurance
  • and the chances that at some point in life you might need assistance with activities of daily living.

The annuity questions are difficult, and fewer than 20% of respondents correctly answered either one.  However, those questions were included because a lot of people in the age group surveyed are buying or have already purchased annuities, so they should understand how they work and have an idea of what they cost.

As for the investing questions, they are directed toward the important issue of the role different types of investments might play in a retirement portfolio; they’re also a good barometer of the test takers’ overall financial knowledge and provide insight into the relationship between financial literacy and retirement planning.

In fact, there is additional evidence that the retirees and near-retirees who fared well in the quiz are more likely to plan better and have more confidence in their ability to manage their finances.  For example, the people who received a passing grade on the test were 46% more likely to have some strategy in place to deal with the cost of long-term care and 36% more likely to feel that they’re able to manage their investments throughout retirement than those individuals who did not obtain a passing grade.

I highly recommend you take the quiz yourself, which you can do by clicking here.  It doesn’t take long to complete, and it could ultimately prove to be a very important few minutes out of your life.  Even if you think you’ve got this whole retirement income thing nailed, you should try it anyway.  After all, 61% of people who took the test felt they had a high level of retirement income knowledge, yet two-thirds of that group ended up flunking.

Give it a try.  You may buck the odds and come away with a passing grade, or even join the tiny minority (less than 1%) who scored an A.  If you find out that you don’t know as much about retirement income as you thought you did—or confirm that you know as little as you feared—at least you’ll have a good idea of what you need to bone up on if you want to improve your chances of enjoying a secure and comfortable retirement.

Asset Protection Planning – Perils of Doing it on Your Own

Dealing with long term care planning, and especially asset protection planning, is a daunting process. Very complicated state and federal Medicaid laws and regulations present many pitfalls for those who try to engage in the asset protection process on their own without working with a competent elder law attorney.  A 2015 Medicaid case from New JerseyContinue Reading

Living Trust and Your Mortgage

Many people, hoping to avoid probate, create an estate plan that includes a Living Trust.  In order to make this type of plan work to avoid probate, you must transfer ownership of your home (or other real property to the trust).  If you have properly transferred your real estate and other assets to your livingContinue Reading

Get Serious About Creating Retirement Income

Worried about retirement income?  In a recent survey by the American Institute of Certified Public Accountants, 41% of CPA financial planners said that running out of money was their clients’ top financial concern when planning for retirement, and fully 70% said depleting savings ranked among their clients’ top three worries, along with maintaining their currentContinue Reading

The Perils of Doing Asset Protection Planning on Your Own

Dealing with asset protection planning along with long term care planning, is a daunting process. Very complicated state and federal Medicaid laws and regulations present many pitfalls for those who try to engage in that process on their own without working with a competent elder law attorney.  A 2015 Medicaid case from New Jersey isContinue Reading