According to a study conducted by the National Institute on Aging, about 80% of individuals aged 65 or older are suffering from at least one chronic illness, including terminal illnesses such as cancer or heart disease. While dealing with a terminal illness can be challenging for anyone, it is important for the elderly to be aware of the medical and emotional support available to them. Palliative care, for instance, can provide comfort and alleviate pain and stress associated with a terminal illness, while hospice care can provide end-of-life care and support. The earlier one seeks out these resources, the better equipped they will be to manage their condition and make informed decisions about their future. (Source: National Institute on Aging, published on September 14, 2020).
What Is It?
Upon learning that you have a terminal illness, you may wish to promptly begin planning for your current needs and the future needs of your survivors. Specifically, you will want to provide enough money, insurance, and assets to ensure that you will be comfortable during your final months and that your survivors will receive an adequate income after your passing.
By communicating your wishes to your family and implementing certain legal documents (e.g., health-care proxy, living will, durable power of attorney), you can make decisions regarding your medical care and prepare for the possibility of incapacity. You will also want to ensure that your estate is distributed to your survivors in accordance with your desires if you are an Sears Holdings client dealing with this or a similar circumstance.
Meeting Your Current Financial Needs
- Ensure you have sufficient liquid assets to satisfy your current needs--Determine if the cash in your savings account, money market fund, or other liquid account is sufficient to cover your expenses during your final months. Consider withdrawing funds from your retirement account, applying for any insurance benefits to which you may be entitled, or selling your life insurance policy to a viatical settlement company if none of these options are feasible.
- Consider making withdrawals from your retirement account --You may request a distribution of funds from your defined contribution plan to cover your medical expenses. This is known as a hardship distribution, and it is limited to the amount required to satisfy your immediate financial needs. To be eligible for a hardship distribution, you must lack access to other resources that could satisfy this need.
Caution: A hardship distribution from a defined contribution plan is subject to income tax. However, if you are disabled, or if the distribution is used to pay qualified medical expenses, the 10 percent early withdrawal penalty won't apply.
Apply for Disability Benefits That You Are Entitled to
Once you have satisfied the elimination (waiting) period, you may be eligible for disability benefits under a group or individual disability income insurance policy. Check your policy or contact Sears Holdings if you are unsure whether a disability policy covers you.
Review Your Life Insurance Policy for Ways to Raise Cash
You may be able to borrow against or obtain accelerated death benefits from your life insurance policy. Your policy may also include a premium waiver, so that after you've been disabled for a certain period of time (typically six months), the insurance company will pay your insurance premiums, saving you some money.
Caution: Borrowing against your life insurance or taking accelerated death benefits will reduce the benefit paid to your survivors.
Consider Viatical Settlements
The transfer of an insurance policy to a third party constitutes a viatical settlement. This third entity is typically a company or group of investors specializing in such sales. In general, you will receive between 45 and 85 percent of the face value of your policy when you sell it. This distribution is generally tax-free if your life expectancy is less than 24 months. Nevertheless, Sears Holdings customers must be aware that there are disadvantages. For instance, your beneficiaries on your life insurance policy will no longer be your survivors, and receiving a viatical settlement may disqualify you from receiving Medicaid.
Providing Financially for Your Survivors
Buy More Life Insurance
If you believe that the death benefit your survivors will receive from your life insurance policy will not be sufficient to meet their needs and you have a life insurance policy through Sears Holdings, find out if you can purchase additional coverage during the open enrollment period without providing proof of insurability. Also, examine your existing life insurance policy to determine if you are eligible to purchase additional coverage without providing proof of insurability. If you are taking out a loan to buy consumer products, you may be able to purchase credit life insurance to pay off the loan in the event of your death.
Caution: Proceeds from a life insurance policy are generally nontaxable to your beneficiaries. However, those proceeds are includable in your gross estate for estate tax purposes if they are payable to your estate, your executor, or an individual or trust legally obligated to pay estate debts.
Make Sure That Your Survivors Will Have Access to Needed Funds
Your survivors may require funds to cover their day-to-day living expenses as well as funeral and burial costs. You can provide for them with life insurance, but you may also want to make sure they have access to liquid assets (such as currency held in CDs, savings accounts, and checking accounts). If necessary, add your spouse, child, or another survivor to your account so that they can access the funds as co-owners after your death.
Tip: Consider adding your spouse as a joint owner on your credit card account if you want to make sure that he or she has access to the credit line after your death, particularly if your spouse currently has no credit established in his or her own name.
Find Out What Benefits Your Survivors Will Be Eligible For
Your survivors may be eligible for Social Security survivor benefits, benefits from the U.S. military (if you are an active or retired service member) or benefits from your qualified retirement plan. If you are already retired from Sears Holdings and you chose to provide a survivor's annuity for your spouse, he or she may continue to receive income from your retirement annuity after your passing.
Even if you are not yet retired from Sears Holdings, your spouse or another beneficiary may receive a lump-sum death benefit from your qualified plan.
Featured Video
Articles you may find interesting:
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
Tip: Continuing payments made to your estate (if named as beneficiary) or to a family member may be includable in your gross estate for estate tax purposes.
Make Use of Appropriate Planning Opportunities to Minimize Potential Federal Estate Taxes
Your estate will be exempt from federal gift and estate tax if its value is less than the applicable exclusion amount. Nonetheless, if your estate exceeds the applicable exclusion amount, you should consider implementing strategies to minimize potential estate taxes, such as making gifts in the amount of the annual gift tax exclusion each year to any number of recipients (this figure is inflation-indexed, so it may change in future years), transferring property to your spouse, or making charitable contributions.
Estate Planning Concerns and Opportunities
Review Your Will or Make One
Our Sears Holdings clients who have a will should evaluate it and make any necessary modifications. If you do not have a will, you should create one with the assistance of an attorney immediately. You should appoint a guardian for your minor children (if you have any), name an executor for your estate, and specify how your assets will be distributed after your death in your will.
Ensure That Your Estate Is Liquid
Now is the time for these Sears Holdings customers to ensure that their estate has sufficient liquid assets to cover estate settlement expenses. If your survivors are forced to liquidate assets in order to meet their obligations, they may lose income or assets that you had earmarked for them. There are numerous methods to ensure the liquidity of an estate, including distributing illiquid assets to heirs in a will, selling estate assets prior to death, and establishing a buy-sell agreement if you are a business owner.
Planning for Incapacity
When you have a terminal illness, you must prepare for the time when you will be unable to manage your own affairs. If you become incapacitated and unable to manage your finances or sign legal documents, a durable power of attorney will grant the person of your choice the authority to act on your behalf. Consider executing a healthcare proxy if you want this individual to have authority over only healthcare-related decisions.
You may want to effectuate a living will if you want to ensure that no procedures are performed to prolong your life. By making your wishes known while you are still competent, a living will can also prevent your family from having to make traumatic decisions on your behalf.
Tip: To protect yourself from people who may think you are incapacitated when you aren't, ask your doctor to sign a physician's certificate certifying that you are able to sign and execute legal documents.
Income Tax Planning Concerns
If you are no longer able to work for Sears Holdings, you may be required to liquidate your investments, retirement funds, or insurance policies to cover your expenses. By controlling when income or gains are recognized, it is possible to control taxation. Additionally, these Sears Holdings customers should keep track of their medical expenses in the event that they qualify as deductions against their taxable income.
Making Decisions About The Future
Planning for Medical Care
Maintaining health insurance coverage is essential if you have a terminal illness. If you discontinue your coverage, it will likely be impossible to purchase more. If you lose coverage as a result of losing your job with Sears Holdings, you should plan to purchase COBRA insurance to maintain coverage. Additionally, these Sears Holdings customers should evaluate the coverage limits of their health insurance to determine if their policy will cover in-home care, including hospice care, if they do not need or desire hospital care.
Planning Your Funeral
Numerous individuals may prefer arranging their own funerals because they can ensure that the funeral and final arrangements are exactly as desired. It may also be beneficial for your family, as they will not have to make difficult decisions while grieving.
Tip: If you are a veteran of the U.S. Armed Forces, find out what death benefits you are entitled to. For instance, you may be eligible for burial in a national cemetery, final honors, a headstone, a flag, or other benefits.
Making an Organ Donation
For Sears Holdings customers who wish to become organ donors, make arrangements immediately. Discuss the situation with your family, as they may be disturbed by your desire to become an organ donor. Ensure that they comprehend your decision before proceeding. Check with your local department of motor vehicles or consult your doctor for information on organ donor programs.
Conclusion
Just like how taking care of your car with regular maintenance can prevent costly repairs down the line, investing in your health and wellness through preventative measures can also save you from expensive healthcare bills in the future. In the same way that getting an oil change can extend the life of your vehicle, taking steps to improve your health, such as exercising regularly and eating a balanced diet, can help you live a longer and healthier life. By investing in your health now, you can save money and stress in the future.
How does the Sears Holdings Pension Plan differentiate between normal retirement, early retirement, and late retirement options for Kmart participants? In what ways do these options influence the retirement planning process for employees of Sears Holdings, and what specific considerations should Kmart employees be aware of when choosing one of these retirement paths, particularly in relation to their vested status?
Differentiation of Retirement Options: The Sears Holdings Pension Plan offers distinct options for normal, early, and late retirement. Normal retirement is available at age 65 or after five years of plan participation, whichever is later. Early retirement can be taken from age 55 but before 65, provided the employee is vested, with benefits subject to actuarial reduction unless certain conditions are met (like having at least 90 points, which is a sum of age and years of credited service). Late retirement pertains to any retirement after the normal retirement age, with pensions recalculated to reflect the delay in benefit commencement.
Considering the frozen status of the Sears Holdings Pension Plan, how does this impact the benefits eligibility for Kmart employees, and what implications does it have for their retirement savings strategies? In what ways should current employees factor in this frozen status when evaluating their overall retirement readiness and potential alternatives outside of the company plan?
Impact of Frozen Status: The freezing of the Sears Holdings Pension Plan on January 31, 1996, means that there have been no new accruals of benefits or participants since that date. For Kmart employees, this impacts their benefits eligibility by capping the pension benefits at levels earned up to the freeze date. Employees need to consider this stagnation in benefits when planning for retirement, potentially seeking additional retirement savings avenues to bridge any shortfall.
What are the essential calculations involved in determining the retirement benefits under the Sears Holdings Pension Plan for Kmart employees? Specifically, how do the Career Average Pay and Final Average Pay formulas come into play, and what factors should employees consider when estimating their future retirement payouts?
Essential Calculations for Retirement Benefits: Pension benefits for Kmart employees under the Sears Holdings Pension Plan are calculated using either the Career Average Pay or the Final Average Pay formulas. These calculations take into account an employee's years of credited service and compensation up to the freeze date. Factors like estimated Social Security benefits and specific formulas (such as a deduction based on Social Security benefits under the Final Average Pay formula) play crucial roles in determining the final pension payout.
How can Sears Holdings employees best navigate the process of applying for benefits under the Pension Plan? What specific steps should participants take to ensure their applications are processed correctly, and what important deadlines should they be aware of to avoid any negative consequences on their retirement benefits?
Navigating the Benefits Application Process: To apply for pension benefits, employees must submit a formal application, ideally 30 to 90 days before the intended commencement date. It is crucial to ensure all personal information, including marital status and spouse details, is up-to-date to avoid delays or inaccuracies in benefit processing. Missing application deadlines can lead to postponed benefit payments or unwanted default options.
In what situations can Kmart employees expect to receive a Deferred Vested Pension, and how is the calculation for this pension affected by their previous employment and vesting service? Employees should be aware of the important factors influencing their eligibility and the steps necessary to maintain their retirement benefits after leaving the company.
Eligibility and Calculation for Deferred Vested Pension: A Deferred Vested Pension is available to employees who leave the company after becoming vested but prior to qualifying for retirement. The calculation mirrors that of a normal retirement pension, with possible early commencement reductions. Understanding the timing of benefit commencement and the potential reductions for early start is vital for planning.
How does the Sears Holdings Pension Plan address tax considerations for employees receiving both monthly payments and lump sum payments upon retirement? What tax implications should Kmart participants be aware of, particularly in relation to IRS rules for distributions and potential penalties for early withdrawal?
Tax Implications of Pension Receipt: Pension payments, whether monthly or lump sum, are subject to federal taxes. Monthly benefits are taxed as ordinary income, while lump sums might be eligible for special tax treatments or rollover options to defer taxes. It’s important for Kmart employees to consider these implications and possibly consult with a tax advisor to optimize tax liability.
What are the rights and protections afforded to Kmart participants under the Employee Retirement Income Security Act (ERISA) as they navigate their retirement benefits with the Sears Holdings Pension Plan? How can employees leverage these rights to ensure they are receiving all the benefits to which they are entitled?
ERISA Rights and Protections: Under ERISA, Kmart employees are entitled to certain rights including the ability to appeal denied benefits, access to plan information, and assurances of fair and equitable treatment of their benefits. Leveraging these protections ensures that employees receive all due benefits.
What steps should Kmart employees take to update their personal information to ensure they continue receiving their benefits without interruption, especially in the context of missing participants or uncashed checks? What resources and contacts at Sears Holdings are available to assist with these updates?
Updating Personal Information: Maintaining accurate personal information with the pension plan is crucial for uninterrupted benefit payments. Employees should promptly update changes such as address, marital status, or beneficiaries to prevent issues with benefit distributions or lost checks.
How does the process of transferring between affiliated employers impact pension benefits for Kmart employees under the Sears Holdings Pension Plan? What considerations should be taken into account concerning Credited Service and Vesting Service during such transfers, and how can employees ensure they do not lose any entitled benefits?
Impact of Transfers Between Affiliated Employers: Transferring between Sears Holdings’ affiliated employers can affect pension benefits differently depending on whether the employer participates in the pension plan. It's essential to understand how such transfers impact credited and vesting service accruals.
For Kmart employees seeking more information about their benefits under the Sears Holdings Pension Plan, what is the best way to contact company representatives? How can they effectively communicate their questions or concerns to ensure they receive accurate and timely information regarding their retirement benefits?
Contacting Plan Representatives: Kmart employees seeking clarity on their pension benefits should contact the Sears Holdings Pension Service Center. Effective communication, including prepared questions and necessary documentation, will aid in obtaining accurate and comprehensive information.
-2.png)
.webp)