By Rick Law, Elder Law Attorney in Illinois. Today let’s talk about a common investment that many seniors have in their investment portfolio.  Mortgage backed securities (bonds) while “safe” may not provide the “ROI” (return on investment) that you’re looking for in today’s economy. Some risks associated specifically with mortgage-backed securities include

• Pre-payment risk;
• Contraction risk; and
• Extension risk.

Prepayment risk is the risk that declining interest rates or a strong housing market will cause the mortgage holders to refinance or otherwise repay their loans sooner than originally expected.  This could then create an early return of principal to holders of these loans. For mortgage-related securities, contraction risk is the risk that declining interest rates will accelerate the assumed prepayment speeds of mortgage loans, returning principal to investors sooner than originally expected and compelling them to reinvest at the prevailing lower rates. Conversely, extension risk is the risk that rising interest rates will slow the assumed prepayment speeds of mortgage loans. This will essentially delay the return of principal to investors and could actually cause them to miss an opportunity to reinvest their funds at a higher yield. The U.S. government offers several types of government debt:

• Treasury bills
• Treasury notes
• Treasury bonds
• Treasury Inflation Protected Securities (TIPS).

TIPS are unique in that the principal amount is adjusted according to the current formula used to calculate the Consumer Price index (CPI). The principal can be adjusted upward or downward as inflation or deflation is determined. The interest rate remains the same. TIPS are offered for sale in maturities of five, 10 and 30 years. During the recent past (2009-2010), the U.S. government calculated that the Consumer Price Index should remain unchanged due to the lack of inflation. As we previously discussed, many criticize the current CPI of being an inaccurate measure of the true impact of the cost of food, fuel and housing. You be the judge.  Has your cost of food, fuel and housing remained the same since the beginning of 2009? If you answered “no,” then you can see that TIPS principal inflation adjustment may be a good idea, but will still significantly lag behind inflationary reality. TIPS values are based on a government-manipulated formula that excludes the basic and inflation-sensitive commodities of food and fuel, meaning that you will not receive complete protection from inflation. As with so many things in life, the devil is in the fine print. Too many families needlessly lose everything they have.  Don’t let that be you.  If you need help building a fortress around your estate to protect it from creditors, predators, and the cost of chronic disease, give our office a call at 800-310-3100.  Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now, because when you’re out of money, you’re out of options! Sincerely, Rick L. Law, Attorney, Estate Planner for Retirees. Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet.  Call 800-310-3100 for your free consultation now!  

By Rick Law, Estate Planner, Elder law Attorney, And Senior Advocate In Illinois Investment type number 3:  traditional low yield “safe” systems and Inflation’s impact on your retirement. All investments offer a balance between risk and potential return, and this balance tends to vary by the type of investment, the issuing entity and the state of the economy. Bonds are no exception to this risk and return rule, although in some cases they are considered lower risk, especially compared to stocks. Some reasons for this include the fact that bonds offer a promise of returning the face value of the security to the holder at its maturity date. Most bonds pay their investors a fixed rate of interest income. This income, just like the return of the bond’s face value, is also backed by a promise from the bond’s issuer. But, because of this “safety,” bonds normally have historically lower average returns when compared with other investments. therefore, investors need to be aware that even though bonds are considered to be “safe,” this implied safety could be washed away by other unforeseen risks. Of importance to retirees and others living on fixed incomes produced by bonds, there is interest rate risk. This means that when interest rates go up, the price of bonds falls. Conversely, when interest rates fall, the price of bonds goes up. Because of this, the longer the bond’s maturity, the greater its interest rate risk. Bonds also have something called duration risk. The modified duration of a bond is technically a measure of its price sensitivity to the movement of interest rates. This is primarily based on the average time to the maturity of its interest and principal cash flows. Duration will allow an investor to more easily compare bonds with varying maturities and coupon rates by creating a simple rule. For example, for each percentage change in interest rates, the value of the bond will decline by its modi#ed duration, stated as a percentage. For instance, an investment with a modi#ed duration of #ve years will rise 5 percent in value for every 1-percent decline in interest rates, and it will fall 5 percent in value for every 1-percent increase in interest rates. Another concern of retirees who are invested in bonds is inflation risk. This causes the dollar of tomorrow to be worth less than the dollar of today, essentially reducing a retiree’s purchasing power. When living on a totally fixed income with the constant increase in prices of goods and services, retirees cannot afford to take too much risk with their future purchasing power. There are other types of risk that are associated with specific types of bonds. For example, bonds issued by a corporate, municipal or government agency may possess “call” risk. This means they include a “call provision” that entitles their issuers to redeem them at a specified price on a date that occurs before the bond’s actual maturity date. Falling interest rates could accelerate the redemption of a callable bond, causing the investor’s principal to be returned sooner than expected. In this case, the investor will have to reinvest the principal, likely at a lower interest rate. In addition, for a bond that is called either at or close to its par value, investors who paid a premium amount for the bond will also risk losing some of their principal. Another type of risk that is associated with government agency, corporate, or muni bonds is liquidity risk. With liquidity risk, investors could have a difficult time finding a buyer when they want to sell. This may force the investor to sell their bond at a big discount to its market value. This risk is especially prevalent with lower rated bonds, bonds that are part of a small issue and bonds that have recently had their credit rating downgraded. Other issuers, such as those for corporate and municipal bonds and mortgage-backed or asset-backed securities, have speci#c types of risk as well. Credit risk, for instance, is the risk that the borrower will not be able to make interest payments when they are due, which could eventually lead to a default. If a corporate debt issuer takes on a leveraged buyout, merger or debt restructuring, it runs the gamut of event risk. This can happen if the underlying company takes on an additional debt load, which can cause the value of its bonds to fall or even interfere with its ability to make payments. There’s more to come!  Stay tuned for more quality info from my retirement and portfolio lessons.  It’s your retirement, and your well being at stake.  I want you to be prepared for what life may throw at you! If you’re ready to start getting your estate in order and secure your assets for the “worst-case” scenario, please give our office a call at 800-310-3100. Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now. Sincerely, Rick L. Law, Attorney, Estate Planner for Retirees. Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet.  Call 800-310-3100 for your free consultation now!  

By Rick Law Elder Law Attorney and Senior Estate Planner In Chicago, IL Investment number 2: Bonds and other fixed income debts. One of our favorite legal clients, Fern, called in a panic one day and breathlessly cried, “I’ve been defrauded! I bought some high return bonds and this month’s statement shows that I’ve lost a lot of money!” As we spoke with Fern it became obvious that she didn’t understand what a bond is, nor how a bond’s principal value can fluctuate wildly. In the investment world, a bond is a security that represents a contract between a borrower (corporation, governmental body, banking institution) and a lender—you. A bond is usually a fixed interest loan. A bond loan arrangement uses terms that are unfamiliar to most.  If you buy a bond, you are lending money to the borrower, who is the issuer of the bond. The bond loan terms detail what interest will be paid to the lender. The interest is called the coupon, and since the lender gets to hold the bond, they are called the holder. The basic relationship between a borrower and lender is well known to all. What makes a publicly traded bond so different is that the basic fundamental principal value of the bond fluctuates. Bond principal value fluctuations are caused by:

• The fixed-interest rate (coupon rate) of the bond compared to the ever-changing general market interest rates
• The perception of a change in the quality or reliability of the bond issuer/borrower
• The remaining term of interest payments
• The ability to easily buy and/or sell the bond (liquidity)

Fern had wanted a higher interest on her investment money than what she could receive from bank CD’s and money markets. She went to a broker and emphasized that she wanted more income. He sold her some “junk bonds.” It is important to understand that the term “junk bond” does not always mean that the bond is trash. Any high-yield bond that is not of a sufficient quality to be considered investment-grade is considered more risky and speculative. These bonds have a higher risk of the lender defaulting. They pay a higher rate of interest, but they are not the best choice for protecting widows and orphans, and Fern was a widow.  She wanted higher income, but she was very risk-averse. When the value of her bond went down, she panicked and sold the bond at a loss—even though I had shown her that the actual income from the investment was still high, compared to the alternatives. Today many baby boomers, seniors and elders have moved trillions of dollars out of the stock market and fled to bonds of all types. Are these smart investments for a risk-averse retiree? Since 2003, the U.S. federal government has been pushing interest rates down. Remember, the principal value of bonds is pushed upward when market interest rates move downward. Sadly, our government has chosen to break the backs of frugal savers by killing a reasonable interest rate return. Temporarily, millions of bond investors who hold investment-grade bonds have enjoyed substantial gains in their bond funds. But what will happen now? The Federal Reserve has reduced intra-bank lending rates to an inflation-weighted negative yield. Inflation is running between 3 percent and 10 percent per year, while interest rate yields have been artificially depressed to 2 percent for a 10-year U.S. government bond. How long can the government keep a lid on long-term interest rates? Whenever market interest rates begin to rise, the principal value of all existing bonds and bond funds will fall. No one knows how high interest rates will rise and bond values will fall, but the risk of great loss is a certainty. Using the old governmental CPI formulae, many cite 10 percent or more as the real inflation rate! Market interest rates have been artificially depressed for an extraordinarily long time.  It does not take a Nostradamus to predict that rates must rise during the next few years. When that happens, millions of seniors will be echoing Fern’s panic: “My statement shows that my principal has dropped!” The interest income being paid on that bond will remain fixed, but the principal value Fluctuates. Fixed-income bonds are not risk-free. They can be an important part of a retirement portfolio, but you must understand that the principal value is not fixed; the income/interest is fixed for the entire term of the bond. Next time: Inflation’s impact on traditional low yield “safe” systems. If you’re ready to start getting your estate in order and secure your assets for the “worst-case” scenario, please give our office a call at 800-310-3100. Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect you and your family.  Call now. Sincerely, Rick L. Law, Attorney, Estate Planner for Retirees. Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet.  Call 800-310-3100 for your free consultation now!  

By Rick Law, Estate Planning Attorney And Senior Advocate In The West Suburbs Of Chicago There’s no use in looking back, so let’s look at the road ahead. Here are some key facts about basic investment instruments to keep in mind as you begin your Elder Care journey. It pays to learn the pros and cons of each—it may really cost you if you don’t. Number one:  Annuities. A quick note – As a lawyer, I believe that no one should purchase an annuity without having it reviewed by an attorney who is familiar with how to read and understand an annuity contract. Annuities are among the most misunderstood investments.  Annuities are investment contracts. They are not equity investments like stock. They are not debt investments like bonds. They are contractual agreements between an insurance company and the purchaser. These contracts are written by insurance company lawyers, who often write in a way that’s difficult for the layperson to understand. Too many annuities are sold based on YTB, not ROI. “YTB” is our acronym for “yield to your broker.” “ROI” stands for “return on investment.” ROI is return on investment to you. Annuities are often misinterpreted by the buyer. The annuity salesperson often points out a bonus incentive, called a “bump,” to buy the product. The salesperson tells the buyer that he/she will receive a 5 percent, 7 percent, or more bonus. The buyer mistakenly believes that the bonus is an actual cash value increase of added dollars. In reality, the bonus is an additional accounting ledger increase for determining the amount to be used for income payouts. It’s a real bonus, but not as valuable as it’s made out to be. Insurance companies are required to maintain enormous capital reserves, and for that reason they have a historical record of surviving and thriving in both good times and bad. They are far better capitalized than any government, any bank, or almost any other type of company.  (Apple or Google may have as high a percentage of reserves.) For investors with a low to moderately low risk tolerance who want to sleep soundly, life insurance company-underwritten annuities may be a safe choice. When money is invested, the insurance company is forced to set aside legally defined reserves to underwrite the company’s contractual obligation to pay you either for an insurance policy risk or for a contractual amount of dollars as defined in the annuity contract. Reserves are specific to the individual insurance company’s financial reserves and current surplus. State law governs the amount of reserves that are required to be held. It’s not unusual for state regulators to require insurance companies to maintain a cumulative combination of both a reserve, plus a surplus (cushion) of $1.10 for every dollar received as a premium. Life insurance companies have another advantage over banks and corporations as investments. Insurance companies do not pay taxes on their reserves, which are their invested assets. While they do pay taxes on their operating net income, the accumulations necessary to cover the policy obligations are treated as tax exempt investments. This tax advantage provides the life insurance companies a significant benefit compared to banks, which must pay income tax on their investment-related profits. Next time: Bonds and other fixed income debts. If you’re ready to start getting your estate in order and secure your assets for the “worst-case” scenario, please give our office a call at 800-310-3100. Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now. Sincerely, Rick L. Law, Attorney, Estate Planner for Retirees. Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet.  Call 800-310-3100 for your free consultation now!  

By Rick Law, Elder Law Attorney And Senior Estate Planner In Chicagoland. One of the biggest challenges of planning for retirement is predicting longevity. People are living much longer than they did even just a few decades ago. In fact, 50 percent of men who turned 65 in 2010 will live to age 81, and 50 percent of women will live to age 84. In addition, roughly 25 percent are expected to live until ages 87 and 90, respectively. One in 10 women today can actually expect to live to age 95. Although longer life expectancy is a wonderful thing, it can present a real issue when trying to stretch retirement savings—possibly for 30 years or longer—for income needed to live on and keep up with the constantly rising cost of living. We have seen clients make every possible mistake with their retirement investments and their choice of financial advisor. Frankly,we have made our own mistakes—they say that’s how we become wise. Wisdom most often is the result of surviving our own mistakes. Yesterday’s solutions and hot investment ideas are not a reliable guide for the road ahead. We are in a new economic time. The old ideas about investments, retirement and estate planning are not working. If you’re just looking back at yesterday’s road map for success, you’ll drive into the ditch. The rules of the road have changed. Tomorrow we’ll talk more about looking ahead to retirement, investing, and beyond. If you’re ready to start getting your estate in order and secure your assets for the “worst-case” scenario, please give our office a call at 800-310-3100. Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now. Sincerely, Rick L. Law, Attorney, Estate Planner for Retirees. Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet.  Call 800-310-3100 for your free consultation now!

By Rick Law – Elder Care Advisor and Estate Planner in Aurora. Now we that we have a better idea of where we’ve been, where the current financial market is, and how and estate planner can help seniors, let’s look ahead. Where do we go from here? How do I know what I’ve got, and how much planning and investment I will need for my retirement? Our good friend Matt Zagula, a nationally known author and respected financial advisor, asks this starter question: “What is your money for?” In other words, what basic goals do you have for what you have accumulated? We often meet with clients and they provide a financial summary or statements showing their assets. These folks have raised their children, put them through school, paid for a home, completed a career, and now sit before us with a stack of papers that reveal to us what they have. But, as Matt points out, the important question is, “What’s the money for?” Some people have never really thought about it, perhaps because they were busy earning it, trying to invest it wisely, and in this economy trying not to lose it… spending some, saving some, worrying over it some.  And now here they are with their net worth on paper. When asked, “What’s the money for?” we sometimes get a blank stare, a confused look, or at least a long pause. It may be that they haven’t considered exactly what they have accumulated it for; or it may be that they’ve never tried to articulate it. No one has asked them to verbalize their hopes and dreams for the ride that’s ahead of them. Some have very specific plans, but most need to think about it. We will prompt them by throwing out some ideas: “I suppose you would like to enjoy your retirement. Do you have any immediate plans?” This generally stimulates some conversation.  The man usually talks about being able to live comfortably during retirement, about not becoming a burden to his family, and about making sure that his wife has enough when he is gone. If he hasn’t thought that far ahead, we discuss their income—what their income is now and what their estate will be when only one of them remains. What income will be lost at the death of the husband? What income will be lost if the wife dies first? This can sometimes be a very eye-opening conversation. You might be surprised to know that many couples don’t understand that they will lose one Social Security check and possibly half (or even all) of the deceased spouse’s pension income. Many people don’t even know if their pension goes on to the surviving spouse, suffers a reduction, or stops completely. We point out that sometimes income drops by as much as two-thirds, while expenses barely diminish at all. Taxes are the same, utilities are the same, gas for the car is the same, and insurance on the house and car are the same. The only expense that may go down is the grocery bill. The cost of the supplemental healthcare insurance may be reduced; however, if the insurance was through the husband’s pension and that is lost, now the wife must pay for a policy to supplement her Medicare. Too often, the assumption is that if the couple has their home paid for and some money put away in savings and investments, they will be OK. But women outlive men of the same age by an average of seven years. If Jim and Shirley are 65 and 63, that means it’s likely that Shirley will need to be provided for during nine years after Jim dies. If Jim suffers from any long-term illnesses, it’s likely they will have to dip into the funds they have set aside. So when Jim dies, Shirley has less income and fewer assets, but nearly the same expenses. Right afer the stock market had a major drop in 2008, one client said,“My 401(k) is now my 201(k).” Financial experts counseled you to just leave your investments alone and they would eventually come back—that is, if you’re young enough to wait that long. We were meeting with individuals and couples who didn’t have that kind of time. Their income sources included Social Security, maybe a pension or maybe not, and interest and dividends that had all but dried up. The assets they had been counting on to take them through retirement were now drastically reduced. Worse yet, Social Security, Medicare and other programs baby boomers have been paying into for years, now face cuts or even elimination. More people are withdrawing from the government programs than paying in. If any of these situations describe you (the senior), your spouse, or an aging parent, now is the time to act.  Don’t be left out of money and out of options. If you’re ready to start getting your estate in order and secure your assets for the “worst-case” scenario, please give our office a call at 800-310-3100. Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now. Sincerely, Rick L. Law, Attorney, Estate Planner for Retirees. Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet.  Call 800-310-3100 for your free consultation now!  

By Rick Law, Estate Planning and Elder Law Attorney in Chicago. So far in this series, we’ve discussed the current state of affairs in the financial market, as well as just how much things have changed over the last decade or so and how it’s hurting seniors the most. Here’s how we – the estate planners and elder care specialists at Law Elder Law- can help you and your family. If you are over 60 years old and you have lived your life as a conservative and frugal person, you need to know how to protect your lifestyle. You need help finding the right advice-givers. At our law firm, we have worked with hundreds of seniors and we have seen the financial choices that our clients have made. They literally open up their books to us. We see our client-retirees’ best, worst, but most often mediocre money decisions. We also get to evaluate the performance of their financial advisors, ranging from the big time active-stock/bond money managers to the financial representative at the bank down the block. Regardless of their investment style, we have found that financial advisors’ ideas also demonstrate the best, worst, but most often mediocre income-generation plans. From boomer, to senior, to elder. This is the guidance we provide our own clients every day. We know how to plan for the trip and predict the typical dangers. We’re right there alongside our clients. One thing we have learned for sure is that there are lots of potholes out there! As our client said at in Part 1 “The retirement, investment, and income crisis many seniors face”:  “They must have changed the rules.” Quite frankly, “they” are always changing the rules—and we want to help you to avoid the hazards and slow down before the speed traps.  We’ll show you how to synthesize safe financial ideas with visionary legal concepts. Our clients frequently tell us, “We don’t want to be out of money before we are out of breath.”  Sound financial advice is one of many services we provide to help you make that goal a reality.  We’ll share with you what we’ve learned from the top 5 percent of financial advisors and estate protection attorneys.  What’s more, we’ll provide examples of the ideas our clients consider successful, our own “road maps” we follow so they can:

• Avoid becoming excessively impoverished by Alzheimer’s disease, cancer, dementia or other debilitating illnesses.
• Protect the lifestyle of the healthy spouse during the illness and after the death of their beloved partner.
• Create lifetime income and long-term care benefits with new hybrid insurance products coupled with innovative legal strategies.
• Provide lifestyle protection and then inheritance for adult children with disabilities and/or the education of grandchildren.

With a trusted approachable Elder Care attorney, you’re always in good hands. Stay tuned for the next installment of senior income crisis in which we’ll discuss the importance of knowing how much you have, and what your estate planning options are. If you’re ready to start getting your estate in order and secure your assets for the “worst-case” scenario, please give our office a call at 800-310-3100. Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now. Sincerely, Rick L. Law, Attorney, Estate Planner for Retirees. Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet.  Call 800-310-3100 for your free consultation now!  

By Rick Law, Elder Law Attorney in Aurora, IL Just how much has the economic landscape changed? We and probably you, too, have lived long enough to see the United States evolve from the world’s greatest creditor nation to the biggest debtor nation in world history. Perhaps even more shocking to both baby boomers and their parents is that we now owe over $2.5 trillion dollars to the Chinese government. Who could have ever imagined that during our lifetimes the communist Chinese would be more fiscally prudent than the United States of America? The work world has also changed drastically. Do you know which work sector is considered the only “job growth industry” in the United States today? The U.S. government. Yes, that’s right.  Today there are fewer than 12 million manufacturing jobs left in the United States, but there are 22.5 million government jobs—and growing. We grew up and benefited from the post – World War II era of prosperity that eventually fueled a massive stock market run-up. The stock market peaked in 2000 and took a nosedive that same year when the technology bubble burst. Since then, there have been some rallies in the market, but (after adjusting for inflation) its dollar value hasn’t come close to what it was before. “Dollar value” is another important concept. Recently on a trip to a true banana republic in Central America, we were told that the residents of that country preferred almost any currency over the U.S. dollar because it is depreciating so rapidly. The world is awash in dollars that the U.S. Treasury has pumped out to deal with the Financial market mess and the enormous amount of deficit spending by the U.S.  government.  In fiscal 2011, the U.S. government actually borrowed 40 cents of every dollar it spent! Inflation due to excess money supply has pummeled the finances of seniors on fixed incomes. The annual increase in the price of gasoline is about 33 percent and rising daily. Beef is up 9.6 percent, coffee up 97 percent, butter up 19.6 percent, and so on. Yet the U.S. government says it’s worried about deflation pressures. That’s because the government has its own way of measuring inflation, and the formula has been designed to underemphasize the thing that most normal people buy. The government uses a weighted formula for determining the Consumer Price Index (CPI), and according to that formula there has been no inflation during the last two years. Let’s consider that further… If the government calculates that there is no inflation, it can keep its own expenses down, since seniors receive no Social Security or other benefit increases unless the CPI reports inflation. In other words: No reported inflation = no cost of living increase in senior incomes. You know from everyday experience that the actual costs of fuel and food and medicine are rising rapidly. But if your income is calibrated to the CPI—as are Social Security benefits—then your income crisis is just getting worse. To combat the most recent financial meltdown, the U.S. Treasury has been lending trillions of dollars at roughly 0 percent to big U.S. banks, big foreign banks and the “too big to fail” Wall Street brokerage/banking firms. In other words, the richest and most speculative groups in the world are receiving free money from the U.S. government, which they in turn are encouraged to lend. Unfortunately for Main Street America—which cannot get a loan—the favored borrower is the U.S. Treasury.  That’s right! Our treasury is lending money at 0 percent to the “fat cats,” and then borrowing it back from them at roughly 3.5 percent for a 10-year treasury bond. By the way, that’s called an “infinite yield.” If you have no cost of capital and you can get a return on lending or speculation with that money, the return on investment calculation is astronomical. No wonder the folks in the financial district of New York City think we’ve been out of the recession since 2009! Meanwhile, the seniors who are the savers and investors—the people who actually worked to accumulate money for their retirement—have seen their safe money income choices pulled out from under their feet.  Certificates of deposit in banking institutions now yield close to 0 percent returns. Both bank and brokerage firms offer money market accounts that pay nearly 0 percent interest.  The lack of a reasonable return on safe investments is coercing many conservative and frugal investors into making higher risk investments that are unsuitable for their age and risk tolerance. Everywhere we look there are ads promoting gold, exotic commodities, junk bonds, variable index annuities, highly leveraged stocks and foreign currencies. But there is hope.  Next time we’ll look at how a trusted legal advisor with a focus on seniors can help. If you’re ready to start getting your estate in order and secure your assets for the “worst-case” scenario, please give our office a call at 800-310-3100. Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now. Sincerely, Rick L. Law, Attorney, Estate Planner for Retirees. Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet.  Call 800-310-3100 for your free consultation now!  

By Rick Law, Elder Care Attorney in Illinois. Yesterday’s investment rules and outcomes don’t apply in today’s retirement landscape. In light of the current economic earthquake, many people are shell-shocked and immobilized by fear. To quote a client: “We’ve got an income crisis. It wasn’t supposed to be like this. We played by the rules. I thought we did everything right. I worked hard to save and invest so Betty and I would have enough to comfortably live off our income. But now we’re spending our principal to just to stay afloat. I don’t know how this could have happened. They must have changed the rules.” This man had a successful career as an administrative executive. He and his wife are both 67 years old. They’re careful, frugal and conservative. He’s an analytical type who researched their investments and created a model diversified portfolio with a balance of stocks and bonds. Investments were all supposed to work to generate an average return of 11 percent per year, as based on long-term historical results. Had history repeated itself, that return would have been more than sufficient to fund their lifestyle and still maintain their portfolio’s principal value. But their well-laid plans blew up! Their savings were devastated by the technology bubble meltdown, followed by a sideways stock market, the world financial system crash, and finally governmental policies that have created zero-interest returns on safe investments. The supposedly right answers about how to provide for a successful retirement just don’t seem to work anymore.  Senior investors are searching for the new right answers to protect their lifestyle. They don’t have the luxury of looking back for the right answers—they’re pioneers, a group of retirees like the world has never seen before. Never in the history of human existence have millions of people had the probability of living to be more than 85 years of age. That’s right, today the average life expectancy of the U.S.  citizen has increased to 78.2 years, and millions of people will exceed that life expectancy by a decade or more.  When thinking about the joint life expectancy of a husband and wife, really old age becomes almost a certainty. The longevity statistics for a healthy couple, both age 65, indicate that at least one will live to be over 90 years of age. (And at least one will most likely spend two and a half to three years in a nursing home.) Just to emphasize how fundamentally different the retiree universe is today, there are now two full generations of retirees alive: the baby boomers and their parents, the “greatest generation.” In the coming days we’ll look at some important topics such as just how much things have changed, How we as elder law attorneys can help, and the necessity of knowing what you have and how much you’ll need to live out your golden years with dignity. Too many families needlessly lose everything they have.  Don’t let that be you.  If you need help paying the overwhelming cost of long term care, give our office a call at 800-310-3100.  Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now, because when you’re out of money, you’re out of options! Sincerely, Rick L. Law, Attorney, Estate Planner for Retirees. Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet.  Call 800-310-3100 for your free consultation now!  

by Rick Law, Senior Estate Planner and Elder Law Attorney in Western Chicagoland. Yesterday we talked about two of the important functions a trusted Elder Law attorney can do for you as you age. If you’ll recall, the first two benefits we provide were: 1.) Safety – because it’s too hard to get back what you lost. 2.) A reasonable rate of return on your money – Most people do not expect to be stock market wizards. They want a safe and consistent way to be able to support their lifestyle. Now, here’s two more reasons you need to talk to a Elder Law attorney and make a plan: 3.) Simplicity, because everybody wants to make legal and financial decisions they can understand. The language and legality of of it all can be confusing… even frustrating.  The laws are complex and ever-evolving.  Don’t leave your future to anyone who can’t explain the issues and risks to you in plain English. I have personally dealt with clients who have lost almost everything because they trusted their estate and their well being to a website that offers blanket legal forms: wills, trusts, etc… almost always a very bad idea.  Not only can they not interact with you and build a plan that is adapted to your unique needs and goals, but they can’t change as the laws change, or be there for you when a new legal need arises regarding your estate. And believe me… they always do. This is similarly true for working with an attorney who doesn’t regularly practice the ins and outs of elder law… they’re usually not up to speed on changing laws, and usually just pop your name onto a generic form that doesn’t have all the protections you’ll likely need. 4.) Income for life. Nobody wants to run out of money before they die. If you are out of money, then you are out of options. As a senior, it’s your goal to not run out of money.  As an attorney, it’s my goal to help you achieve that.  Unfortunately, it’s all too common for people to wait too long.  Circumstances can range from spending all your savings on a nursing home costs, long term care costs, or waiting too long and trying to care for a loved one at home – all of which can leave you out of money and out of options. Don’t delay. Whether you’re approaching retirement, worried about the possibility of a serious illness, or already retired, if you’re thinking about it, then the time to visit an elder law attorney is now! Too many families needlessly lose everything they have.  Don’t let that be you.  If you need help paying the overwhelming cost of long term care, give our office a call at 800-310-3100.  Your first consultation is absolutely free.  We’ll let you know what steps you need to take, right now, to protect yourself and your family.  Call now, because when you’re out of money, you’re out of options! Sincerely, Rick L. Law, Attorney, Estate Planner for Retirees. Rick was named the #1 Illinois elder law estate planning attorney by Leading Lawyer Magazine. He has been quoted in the Wall Street Journal, AARP Magazine, TheStreet.com, and numerous newspapers and articles. Rick is the lead attorney for Law Elder Law, LLP, focusing in Estate Planning, Guardianship, and Nursing Home Solutions. His goal is to give retirees an informed edge when it comes to dealing with an uncertain future.  Get flexible retirement strategies that work during good times and bad, plus information on how you can save your home and assets from being used to pay for long term care.  Appointments available in Chicago, Aurora, Oak Brook, Schaumburg, and Joliet.  Call 800-310-3100 for your free consultation now!