The Ways Pets Improve Our Retirement Well-Being

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Two factors make this year an opportune time to consider succession and wealth planning.

According to Bankrate data, the average savings account paid just 0.09 percent interest as of September. However, you don’t have to settle for such a puny yield. There are high-yield accounts that pay more. Right now, the best ones pay around 0.9 percent, but that rate is still relatively low for money that you won’t need for a number of years.

Instead of keeping that money in a savings account, you could direct it into investments with greater growth and income potential, such as mutual funds, bonds, stocks, and exchange traded funds, or ETFs. These investments are riskier than a savings account, but offer higher potential rewards.

Financial educator Angel Radcliffe suggests that “your emergency fund should be at minimum three months of living expenses. I would recommend six.” That means someone with monthly bills totaling $3,000 should have between $9,000 and $18,000 in savings before they start investing their extra cash in higher-yielding investments.

“Once you have three months of expenses built up, ask yourself how much more you’d feel comfortable with,” Oelker says. “Is it six months? Nine months? Twelve months? A lot of this answer has to do with how comfortable you are with the risk of losing income, as well as how long you think you would need to stretch your (emergency) fund if needed.”

One of the first places to look for higher-yielding accounts should be online banks. They tend to offer some of the highest interest rates on savings accounts and rarely have minimum balances or charge monthly fees.

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INCOME

The federal estate and gift tax exemption is at a historic high

First, the federal estate and gift tax exemption is at a historic high of $11,580,000 in 2020—$23,160,000 for couples if portability is elected on a federal estate tax return.

Portability allows a married decendant’s unused estate and gift tax exemption to pass to the surviving spouse. The tax rate is 40%.

This exemption amount expires at the end of 2025, but if the Democrats win big in November, odds are good the exemption will fall sooner, perhaps as early as 2021, because Joe Biden has called for lowering it. He hasn’t given an exact figure, but we think the exemption could revert to pre-2018 levels of about $5 million ($10 million for couples), with inflation adjustments.

All-time low IRS interest rates

All-time low IRS interest rates are another reason for succession planning, according to Pamela Lucina, chief fiduciary officer and head of the trust and advisory practice for Northern Trust Wealth Management. The low rates make intra-family loans and certain estate and gift freeze strategies valuable planning tools. She advises high-wealth individuals to start planning now by reviewing their goals and figuring out how much of their wealth they are ready to part with.

This quality of being non-correlated allows investors to build portfolios that zig when the market zags. By mixing and matching the qualities of the asset classes, an investor or financial adviser can make a portfolio less volatile and potentially achieve the same returns as or better than a riskier portfolio. Asset allocation takes advantage of the principle of diversification to reduce risk.

For instance, if you have 30 years until retirement, you can afford to take more risk in exchange for the higher potential returns available in the stock market. So a financial adviser or robo-adviser would usually recommend a higher allocation toward stocks and less in low-return bonds. However, as you near retirement an adviser might gradually shift you into safer assets, such as more CDs or bonds. CDs offer guaranteed returns, a valuable trait when you need low risk.

$11,580,000

for InDIVIDUALS

$23,160,000

for COUPLES

Tax rate

40%

Kiplinger

Funny Chihuahua peeping out the frame, against white background

Scared kitten attacks on white background

The Ways

Pets Improve Our Retirement Well-Being

A rare silver lining emerged during the coronavirus pandemic as people stuck at home sought animal companionship through foster care or pet adoption. Their instincts to shelter in place with a dog or cat were right on target because

in times of stress, pets offer people emotional and social support.

“When you give a pet love, you get unconditional love back,” says Jean Shafiroff, national spokesperson for the American Humane and owner of Rosita, a mix rescue dog. “It’s a very therapeutic bond.”

For older adults, pets are a buffer against loneliness and isolation, but the benefits go beyond boosting human spirits. A growing body of evidence suggests our four-legged friends improve our health, too.

That research found that people who had a heart attack and owned a pet were MORE LIKELY TO BE ALIVE a year later than those without a pet.

Among the 39 patients without pets,

Of the 39 patients without pets, 11 had died.

Only three of 53 pet owners died.

Compared to

Now a professor and associate dean for research at the University of Maryland School of Nursing, Friedmann was the lead author for a scientific paper published in 2018 that found dog owners adopt healthier lifestyles, including getting enough exercise and sleep.

28%

“Having a dog gives a person a reason to exercise and thus improves cardiovascular health,” the paper says.

Research also has shown that bonding with a pet can produce oxytocin and prolactin, the same hormones that women secrete when their baby is breastfeeding. In 2015, Science reported that humans bond when they gaze into one another’s eyes, and a similar bonding takes place between dogs and their owners.

Says psychiatrist Gregory Fricchione, who was not involved in the research:

“Dogs have the ability to increase oxytocin in their owners.” Oxytocin, he adds, is an anti-stress hormone. “In and of itself, it’s likely to be health promoting.”

He is director of the Benson-Henry Institute for Mind Body Medicine at Massachusetts General Hospital and a faculty member of Harvard Medical School.

Biologist and public health researcher Erika Friedmann has been studying just how therapeutic that bond is. Her research with colleagues was among the first to document the health benefits of pet ownership 40 years ago.

Other studies have linked pet ownership with

decreased blood pressure, slightly lower overall blood cholesterol levels and general calming benefits, although more research could determine whether pets reduce anxiety or even depression in people.

For some pet owners, no research is needed. They already believe their four-legged pals enrich their lives.

When Susan Feldman, 71, and her husband Marc Labadie, 72, who live in Portland, Ore., first met, they had three dogs between them.

“You can really meet a lot of people through dogs,” she says. “It’s very social.” Of the two rescue dogs, Stella, 16, and Mack, 9, that the couple has now, Feldman says, “They’re just fun to be around.”

Lexington, Kentucky, United States - April 26, 2015: Group of people playing with their dogs at Jacobson Park in Lexington, Kentucky.

There are also health risks associated with pets. Although they are unlikely to spread COVID-19, pets can pass on other diseases to people.

“Handwashing is more important than ever now after touching, feeding or caring for your animals,” says Casey Barton Behravesh, director of One Health Office at the Centers for Disease Control and Prevention.

Owning a pet isn’t cheap. Pet adoption typically ranges from $75 to $250 depending on the animal and its age.

$75 to $250

The average initial cost of purchasing or adopting a dog, including spaying or neutering, is even higher—$2,127—says the American Kennel Association. Thereafter, annual expenses average $2,489.

A pure-bred cat from a reputable breeder can cost between $300 and $1,500, according to the Cat Fanciers’ Association.

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