Caring for Your Parents, Your Community, Your Happiness, and Your Retirement
Feeling happy?
That could be because spring has finally sprung here in the Midwest.
Or, more specifically, it could be because you're part of the Keen Wealth audience right here in Overland Park!
A recent report by WalletHub ranked the 182 "Happiest Cities in America." The researchers evaluated 29 “key indicators of happiness, including depression rates, income growth, and average daily leisure time.”
Fremont, California topped the list, and half of the top ten were cities in sunny California and Arizona. But the Midwest had a strong showing, too. Bismarck and Fargo, North Dakota both made the top five. And coming in at number six was ... Overland Park, Kansas!
While it's certainly gratifying to see well-deserved recognition for our city, I've always felt grateful to be living and working here. Yes, the reasonable cost of living, centrality for travel to other parts of the country, and variety of outdoor activities are all wonderful. But the sense of community here is really special. My team at Keen Wealth experienced that firsthand recently when the Keen Wealth Foundation and Charitable Impact Committee, led by my wife Carissa, had the honor of serving as the entertainment sponsor for "Kids Night Out," a massive gala that raised $3.5 million for the Boys and Girls Clubs of Greater Kansas City.
Taking care of each other, in our communities and in our homes, is one of the most direct ways that a financial plan can boost your spirits. On today's show, we answer questions from two listeners who are thinking about how different generations of Americans can help each other enjoy more security and happiness in retirement.
1. "I keep hearing Social Security is going broke in about six years. Every fix I read about seems to either raise taxes or cut benefits. Is there actually a fix that doesn't take advantage of one generation to protect another? And is there a reason Congress isn't doing anything about this?"
First of all, Social Security isn't going anywhere anytime soon. Too many soon-to-be retirees have paid into the system, and too many current retirees rely on those checks. Allowing the Trust Fund to run out of money would create major economic problems and a large block of very, very angry voters.
That said, it's true that the Social Security Trust Fund is projected to become insolvent in 2032. But "insolvent" doesn't mean "empty." Even if Congress does absolutely nothing between now and then, payroll taxes from the active workforce would still cover roughly 80% of promised benefits. We'd be dealing with a shortfall, not a cliff. And the government, by law, would have to cover that shortfall and keep providing benefits.
The two most obvious fixes would be to increase the amount of money in the fund (raise taxes) or spend less money from the fund (decrease or delay benefits).
A recent study by the Wharton School at the University of Pennsylvania modeled several potential solutions between those poles, ranging from a straight tax hike to a straight benefits cut. Wharton found that a blend of minor tax increases combined with minor benefit adjustments (like slowly raising the retirement age over a period of decades) would preserve the highest lifetime benefit for individuals.
Another option could be a "means test" for Social Security, which could reduce Social Security benefits for wealthy retirees. Medicare already does something similar with Income-Related Monthly Adjustment Amount (IRMAA) surcharges to monthly premiums for seniors earning above certain thresholds.
Each of those paths looks pretty straightforward on paper. So why isn't Congress getting to work on this?
Because, politically, 2032 is a long way away. In the early 1980s, the Social Security Trust Fund faced similar shortfall projections. Congress didn't fix the problem until the Trust Fund was mere months away from being unable to pay full benefits.
Our leaders probably won’t let Social Security get that close to the brink again. But, if history is any guide, Congress usually doesn't act until it absolutely has to.
2. My parents are getting older. Should I be talking to them about money?
Absolutely!
And, in many families, that's easier said than done.
Like many of the folks we work with at Keen Wealth, this listener is part of the "sandwich generation": adults who are feeling a bit of a squeeze from taking care of aging parents and their own children simultaneously. This can be a daunting challenge, financially and emotionally. The best any of us can do is approach these conversations with a focus on empathy and dignity.
A good opening strategy for sandwiched caregivers is to focus on logistics. You probably don't need to know how much money your parents have. But you do need to know where important documents are, how to access their accounts, and whom to call if you need help.
So, you might ask mom and dad:
If you both wound up in the hospital tomorrow, would I be able to find your insurance policies?
If you had to stay in the hospital, how would I log in to your account and pay your bills?
If you became incapacitated, would I be able to find your estate plan?
Once you have the lay of the land, create a simple one-page document that lists all of your parents' financial institutions and contacts for all their legal and financial professionals. File this list with their estate plan and put a copy somewhere that’s easy for you to access when you need it.
At Keen Wealth, we consider it a privilege to help families reach across generations and use comprehensive financial planning to provide comfort, enjoyment, and happiness to each other. Whether you’re feeling “sandwiched” or prepping for retirement, let’s talk about how our process could help you feel more confident about your money.
About Bill
Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
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