COMFORT IN AN EMERGENCY
Why You Need a Power of Attorney
Estate planning is about much more than determining what will happen to your assets after you pass away. It’s also crucial to plan for medical emergencies. In fact, designating financial and health care powers of attorney (POA) should be an essential component of any estate plan. A POA gives someone the legal right to act on your behalf. These documents also outline the specific type of decisions the designated agent can undertake and sometimes detail a single event. For example, if you become incapacitated, designating financial power of attorney will allow someone you choose to handle your finances on your behalf, while a health care power of attorney grants someone the right to make decisions about your medical treatment. Before designating an agent, consider whom you trust with your money and health. Some people might select the same family member to be their financial and health care agents, but others could choose separate individuals. Each situation is different, and you know what’s best for you. While a relative who cares deeply about your well-being may be an ideal health care agent, this person might make a terrible financial agent if they can’t balance a checkbook. Each state has methods for determining who will make decisions for an incapacitated person when they do not have a predesignated
power of attorney. But the process is less than ideal. Having to hash out who should be your representative can cause strife within your family when they need each other the most. Further, an incapacitated person no longer has the ability or right to determine who will take on these crucial responsibilities and make monumental decisions about their care, finances, and life. Creating power of attorney documents while you are of sound mind gives you some measure of control over your future. Fortunately, many POA designations will never take effect, but if the worst happens, you’ll be better off having a power of attorney in place.
CHOOSING THE RIGHT MOMENT The Perfect Time to Claim Social Security
Most of us pay into Social Security our entire working lives, but how much we each benefit from this mandatory investment depends on when we start claiming benefits. Whether you start claiming Social Security at age 62, 70, or somewhere in between is a highly personal decision. But everyone should consider several factors before deciding when to start receiving their checks. The earliest age someone can start claiming Social Security benefits is 62. Many people don’t want to work longer than they have to, so immediately cashing in might seem like a great idea. But there is a catch: People who collect Social Security at 62 receive reduced benefits. According to CNBC, someone who turns 62 in 2023 and begins claiming benefits will receive a 30% lower monthly benefit than if they wait until 67 — and the reduction is permanent.
The full retirement age is 67 for most people still waiting to claim, at which point they can receive 100% of the benefits they’ve earned. But there’s an incentive to wait even longer. Benefits increase by roughly 8% for each additional year you wait until age 70. CNBC further calculates that someone who doesn’t begin receiving benefits until 70 will receive 76% higher benefits than someone who takes them at age 62. If you only look at the amount of your monthly benefit, it’s clear that waiting until 70 is ideal. But you should consider other factors. For example, some people have minimal savings that will not allow them to make ends meet. But if they’re laid off or pushed into early retirement, claiming Social Security might be the only option, despite the downside.
Someone in good health with a reasonable chance of living a long life will generally benefit from waiting. However, someone in poor health at age 62 may want to receive benefits while they still can. (Even then, experts remind you to weigh the impact of survivor benefits.) Before claiming Social Security payments, discuss your long-term plans and goals with your family. Additionally, discussing the matter with your financial advisor is extremely wise. They can evaluate your circumstances and guide you through your options.
Everyone considering claiming Social Security should also evaluate their health.
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