NewRetirement Retirement News Digest
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NewRetirement Retirement News Digest

Browse the news below to learn about important developments shaping retirement.
Tightrope: Retirees, put your experience to work
USA Today, February 2nd, 2010

Hi, Gladys, I'm 73 years young and I need to make money to supplement my Social Security. I would like to try selling the fire extinguishers that you talked about in your book. I think I can sell them at flea markets and maybe even set up a table at conferences at my local convention center. I need you to supply the name and address of the manufacturer so that I can buy them wholesale. — Don

Yes, my teenage entrepreneurial life started out selling all sorts of different things including fire extinguishers. That was more than 40 years ago. I don't remember the company name or where they were located. What I do know is that there are more opportunities today for earning money than were available 40 years ago.

FOR ENTREPRENEURS: Small Business front page

More and more seniors are entering the small business world in order to supplement their income. And for that the world is, or should be grateful. In the past our seniors took all of their valuable knowledge, wisdom and know-how into retirement with them. The economic situation of today has allowed the knowledge and wisdom gained by those of us over 50 to remain active and lets us share our know-how with the younger generation.

I regularly encounter folks who have taken the knowledge they've acquired and put it to economic use. Let me share a some of their stories with you. Hopefully you will be inspired and get an idea or two for yourself.

I walk daily in a park near my home. On those walks I often run into a couple, both in their mid-70s. When the cost of living exceeded their fixed income they decided that the best answer was to start a business. Both loved animals. They had three dogs as pets and knew plenty about their care requirements. With that in mind they started a "doggie daycare service." Dog lovers brought their pets to them for care during the day instead of leaving the dogs locked up in the house while they went to work. Their service also extends to vacationing families that don't want to place their beloved animals in a kennel. The couple walks the park every day with about 10 dogs on leashes. According to them, they realize a substantial income as a result of their service.

Read more of this article.

Working in Retirement:  Many companies are specifically looking to hire retirees.  Let NewRetirement.com help you find these companies and other opportunities should you wish to continue working.
5 Proposals in Obama’s Budget for Retirement Savers
US News & World Report, February 2nd, 2010

President Obama’s budget for fiscal year 2011 includes many proposals aimed to help workers prepare for retirement. Here’s a look at the retirement projects the White House is asking Congress to fund.

Automatic IRAs. Companies that don’t offer a retirement plan may soon be required to enroll their employees in an IRA account. Under Obama’s current proposal, 3 percent of employee pay would be direct-deposited into a Roth IRA, the default savings vehicle. Workers may opt out, chose a traditional IRA, or elect to save a different amount. Small firms with 10 or fewer employees or companies that have been in business less than two years would be exempt from participation.

Employers could claim a temporary tax credit upon automatically signing their workers up for the IRA for $25 per enrolled employee up to $250 for two years. Another tax credit would be available to small businesses that begin their own retirement plan equal to 50 percent of the start-up expenses for establishing or administering a new retirement plan up to $1,000 per year for three years, an increase from the $500 businesses are eligible for under current law. The proposal would become effective in 2012.

A government 401(k) match. The Obama administration is proposing expanding the Saver’s Credit in 2011 to provide a 50 percent match on the first $500 of retirement savings for individuals who earn less than $32,500 annually. Couples who take home less than $65,000 could receive a match on their first $1,000 of savings and the match would be gradually phased out for couples with income between $65,000 and $85,000. The maximum credit would be $250 for a single filer and $500 for a married couple and be fully refundable.

Read more of this article.

Professional Financial Advisers:  Find out how these proposals will affect your retirement planning by contacting a professional financial adviser, or researching individual programs on NewRetirement.com
Finances crushed by 'upside-down' car
The Oklahoman, February 3rd, 2010

DEAR BRUCE: A few months ago I purchased a car for $28,000. Now I'm regretting my decision. I was so excited about this shiny car that I jumped into a deal that I just can't afford. I have been to several dealers hoping to trade the car in on something used knowing that I would have negative equity. Every dealer told me that it couldn't be done, that I am "upside-down." I'm not sure what that means. How do I sell this car and get out from under?

DEAR R.T.: Unhappily, there is very little that I know of that you can do. When you drive a new car off the dealer's lot, it depreciates dramatically. The problem is that if you put little or no money down, then you are immediately "upside-down." You didn't mention it in your letter, but I'm assuming that you financed the car for four, five or even six years, which further exacerbates your situation. You are just going to have to swallow hard and maybe pick up a part-time job to make the car payments.

DEAR BRUCE: I want to throw in my two cents about viaticals. I know you have addressed them before in your column and you are on point. Viaticals and life settlements are not an investment for the faint of heart. Just like the insurance business, its success depends very heavily on the law of large numbers. We are an institutionally funded purchaser of life settlements and own hundreds of millions of dollars of these policies. I just don't want to see any small investors hurt in this marketplace. -- Reader, via e-mail

DEAR READER: Thank you very much. Everything you say is true. Investing in viaticals is one that has to be looked at very carefully. Professionals like yourself know this, and, oftentimes, the amateur investor is misled to their sorrow.

Read more of this article.

Life Settlement Programs:  Investigate whether a Life Settlement is the right decision for you by researching on NewRetirement.com
Warning signs to look for when visiting senior homes
The Seattle Times, February 4th, 2010

Washington State Long-Term Care Ombudsman Louise Ryan, an advocate for the elderly and others in long-term-care facilities, answered questions Wednesday online about caring for those in adult family homes and other settings. Her office:    800-562-6028        

Q: What are warning signs family should be on the lookout for when visiting family/parents in these homes?

A: Listen to what your family member is telling you about the home. Even if they have dementia, they still might be able to report on certain circumstances accurately. Observe their behavior/body language around the staff. Are there smiles and respectful communication? Do staffers know your loved one's needs and preferences? I also think it's fair to ask your family member if you can observe their skin, depending of course on the relationship that you have with your family member. Also, know that not all bruises are a sign of abuse. If you see bruises, ask your family member what happened and ask the provider.

Warning signs of abuse/neglect/bad care can include such things as repeated falls, unexplained weight loss, sudden changes in behavior such as withdrawal or agitation, not toileting or grooming. Again those are indicators. As a family member, do not hesitate to ask questions. And if you are not satisfied with the answers, seek out help from an ombudsman, send a complaint to DSHS, and consult with your loved one's physician.

Q: The food at my mother's nursing home is awful. She doesn't eat most of it and is losing weight. How do I get them to serve more palatable meals?

A: This sounds like a project for a resident or family council. If your mother is able to attend a resident council meeting, have her put it on the agenda to discuss. Be specific about the food problems — too much starch, not enough fresh fruits, and so on. Make specific suggestions to the dietary staff and administrator. Ombudsmen are experts at resolving food complaints: Resident Councils of Washington: www.residentcouncil.org, and Family Councils: www.nccnhr.org

Q: Other than lower cost to the public, why would the state put people in family-like homes instead of institutions such as nursing homes?

A: Our state has a genuine interest in honoring consumer choice of where a person receives services — in his own home (and with a choice of home-care provider) or at a facility (and that includes what type of facility). The challenge our state faces and what was so well described in "Seniors for Sale" is that promoting choice can become paramount to other practical matters. We want choice and we also want quality care, services and support. Although our state faces a huge budget crisis, this is not the time to reduce community-based services.

Read more of this article.
Is annuity offer too good to be true?
Dallas Morning News, February 4th, 2010

My wife and I are retired, in our 70s and live comfortably on Social Security, dividends and some CD interest. We have recently received an offer through AARP to invest in a fixed immediate annuity with a cash refund feature that guarantees you will never be paid back less than you paid in. In other words, if a spouse dies, the surviving spouse would be paid the difference.

The offer indicates that a $100,000 annuity for a 76-year-old would pay $687 a month for life. That would be $8,244 a year, or an annual return before taxes of more than 8 percent. We don't understand how the annuity can pay such a high interest rate when our CDs are paying less than 1 percent a year. Can you clarify this for us?

A.R., Dallas

Part of what you are receiving is your original investment, not interest. The actual investment return that you receive, if any, will depend on how long you live. The longer you live, the better the chance that you'll get "your money's worth" from the contract. Remember, you're buying a life annuity. That's a contract with an insurance company that will provide you with a fixed monthly payment for your lifetime. These contracts have many variations:

• A fixed monthly payment for your life only.

• A fixed monthly payment for your life or at least 5, 10, 15 or 20 years.

• A fixed monthly payment for your life with an installment refund that guarantees that you, or a beneficiary, will receive at least an amount equal to the original investment paid out in monthly payments.

The offer you got in the mail, $687 a month for life with installment refund, is less than the amount offered on a similar contract on the Web site www.immediate annuities.com. There, the installment refund annuity payment is $757 a month, or 10.2 percent more. So the offer isn't "too good to be true." It's somewhat below typical offers.

Read more of this article.

Annuity Advice for Retirement:   Learn more about the ins and outs of annuities by browsing our information resources at NewRetirement.com
Fifteen Ways to Slash Spending in Retirement
Business Week, February 4th, 2010

Workers approaching retirement are often told by experts that they will need only about 80% of their income after they stop working to maintain the same lifestyle.

After all, expenses fall when retirees don't need to dry-clean their work wardrobe and commute every day. And they have more time to shop for deals and handle house and yard work themselves. Presumably, the children are out of the nest or have their own financial flight plan.

The problem is that many retirees soon discover the 80% rule of thumb doesn't work. "I'm finding that to be unrealistic with today's retirees," says James R. Miller, president of Woodward Financial Advisors in Chapel Hill, N.C. "It is more like 100%."

Expenses associated with work might fall, but early retirees face temptations everywhere, whether in the form of travel, golf, club memberships, or more socializing.

A regular paycheck—and the obligation to save much of it each month—often constrains budgets. By contrast, the newly retired can dip into a nest egg for the first time, and "for some, it's akin to winning the lottery," says Ken Eaton, a principal at financial planning firm Stepp & Rothwell in Overland Park, Kan. Without the "artificial boundary" of a paycheck, "they can easily spend a lot more than their portfolio can sustain," he says.

Bloomberg BusinessWeek received tips from more than two dozen financial advisers on how to spend less in retirement.

Read more of this article.

About Reverse Mortgages:  Learn all about reverse mortgages at NewRetirement.com

Professional Financial Advisors:  Find out what a financial advisor can do for you at NewRetirement.com.
When the Patient Can’t Afford the Care
The New York Times, February 4th, 2010

During my training, I took care of a man in his 50s with a devastating surgical complication: His abdominal incision had split open a week after an emergency operation. Even after we had taken him back to the operating room, sewn the deepest layer of his abdominal wall closed and treated the infection that had caused his wound to fall apart in the first place, he still had a three-inch long crevice along the middle of his belly. Until the edges contracted and the gaping expanse filled in on its own, he and his wife would have to pack damp gauze into the wound every day to keep it clean and help it heal.

But on a visit a few weeks after his discharge from the hospital, I noticed that the gauze had been packed more loosely and changed less frequently than we had instructed. What should have been white and fluffy looked dried and yellowed, and his wound was no longer clean and healthy but covered with crusty patches.

When I started to lecture him on the importance of dressing changes, he leaned over to interrupt. “Hey, Doc,” he said, pointing to the pile of unopened gauze I had brought into the room to re-dress his wound. “Do you think I could have the extra? This stuff isn’t cheap.”

My patient had been cutting back on the gauze and changing the dressing less often because he couldn’t afford the supplies. And while I had been careful to recite the science behind the treatments, I had no idea how much he had to pay or if he could afford the expense.

As I stuffed a few packages into my patient’s pocket, I realized that in the busy day-to-day pursuit of becoming a good doctor, I had telescoped in on the clinical details, neglecting my once-cherished ideal to embrace the social and economic aspects of health care. By the time I was in residency, as was so apparent that afternoon, I had completely lost touch with my patient’s economic reality.

I believed that being a good doctor meant knowing the clinical facts down cold. And I somehow had led myself to believe that it would’ve taken much more time and effort to pay closer attention to those other details.

It was as if there had to be some kind of trade-off.

But I was wrong, on two counts. It was possible to learn about the economic and social aspects of health care while immersed in the details of biology, physiology and pharmacology. And it was impossible to become a good clinician without doing so.

Read more of this article.

Supplemental Medicare Insurance:
  Consider purchasing additional medical coverage to ensure that you can afford the costs of health care.
Ex-bank employee accused of swindling old woman
San Francisco Chronicle, February 6th, 2010

A 25-year-old former customer service representative with a San Francisco branch of Bank of America has been charged with swindling $61,000 from a 96-year-old woman who entrusted him with her finances.
Feds warn of top 5 mortgage scams
Deseret News, February 5th, 2009

When given the opportunity, criminals will target whom they perceive as the weakest among us. And that notion could become even more apparent as Utah and the nation cope with the bursting of the real estate and economic bubbles.

The Salt Lake office of the Federal Bureau of Investigation and the Utah Division of Real Estate have compiled a list of the potential top five mortgage related rip-offs in 2010. Chief among them: a reverse mortgage scam targeting the elderly.

"Scam artists are always looking for new ways to reinvent the same crime," said Michelle Pickens, special agent and mortgage fraud coordinator with the FBI. "The reverse mortgage scam is based off the 'straw buyer' model where they use senior citizens … against their own mortgages."

Reverse mortgages can be a legitimate way for homeowners to take equity from their homes without a monthly payment, which can be especially useful to seniors who need supplemental income during retirement, she said.

Unfortunately, con artists sometimes convince seniors they can live in a home for free, obtain a home loan under the occupant's name and disappear with the equity, while leaving the victim to repay the mortgage.

Read more of this article.

About Reverse Mortgages:  NewRetirement pre-screens reverse mortgage lenders to work with, and provides as much information as we can about the pitfalls and considerations that seniors should know about when dealing with reverse mortgages.  Learn more at NewRetirement.com.

Mortgage Refinancing:  Learn what you should and shouldn't do when considering refinancing your home at NewRetirement.com.

Strategies for your retirement savings
The Kingston Whig-Standard, February 5th, 2009

A formalized savings plan is one of the soundest ways to turn your retirement dream into a reality. Taking advantage of the tax benefits of an RRSP, TFSA and RRIF are strategies that I have always recommended. Here are some strategies that you can use to maximize the benefits of your Self-Directed RRSP, TFSA or RRIF.

GROW YOUR SAVINGS

* TFSA is a new general-purpose tax-efficient vehicle for Canadians that complements existing registered savings plans for retirement and education. TFSA will allow Canadians to set money aside in eligible investment vehicles and watch those savings grow tax-free throughout their lifetimes. TFSA savings can be used to purchase a new car, renovate a house, start a small business or take a family vacation. It's the single most important personal savings vehicle since the introduction of the RRSP.

* Make an "In-Kind" contribution -With a self-directed RRSP, you can contribute qualified securities you already own rather than selling the securities and contributing cash. You'll still have to pay the tax on any accrued gains at the time of the transfer but don't transfer securities that have declined in value, as the loss will be denied.

* Consider an RRSP loan -If you do not have enough money to make a full RRSP contribution this year or you want to take ad-v a nt a g e of your unused RSP room, consider an RRSP loan. By applying the tax refund generated by your RRSP contribution to the balance of the loan, you should be able to pay off the entire loan within the year. Interest on these loans is not tax-deductible so paying off the loan as quickly as possible is a must.

* Get out of that RRIF -A RRIF requires you to take a minimum amount from the plan each year. If you don't need the income and are under age 71, roll your RRIF back into an RRSP. Although this can be done on a tax-deferred basis, you will be required to make the annual minimum withdrawal from the RRIF before the plan is closed.

Read more of this article.

Professional Financial Advisors:  Many of the above plans are highly technical, and can require expert advise to properly employ and integrate with your portfolio.  Consider looking into a professional financial adviser to assist you in navigating your financial plans.
Private nursing homes get lower ratings
Montana Billings-Gazette, February 4th, 2009

A disproportionate number of Montana nursing homes rated below average by the government are operated by for-profit corporations, an analysis shows.

Almost 60 percent of the state’s skilled-nursing facilities awarded one or two stars by Medicare are for-profit entities, according to information available on the government’s Nursing Home Compare Web site.

But only about 40 percent of all Montana nursing homes are run by for-profit companies.

“I don’t know whether they’re trying to cut corners,” said Kathy Chaffee, regional ombudsman for the Area II Agency on Aging in Billings. “What I would like to see are their survey results. What are they not doing?”

Medicare rates nursing homes on a five-star scale using data collected during annual inspections. Facilities are also scored on their staffing levels and how they perform on certain quality measures.

Some 26 of Montana’s 90 nursing homes earned one or two stars in the most recent analysis. One star is “much below average” and two stars is “below average,” according to Medicare.

Read more of this article.

Long Term Care Insurance:   Consider mitigating the enormous financial burden of Long Term Care by researching your options at NewRetirement.com.
Resources to Help Manage Care for Aging Parents
AP Newswire, February 4th, 2009

The financial strain of caring for older relatives can be devastating without proper planning. Here are some online resources for those who want to put the proper safeguards in place and for caregivers who may be looking for assistance:

www.medicare.gov -- Find out what Medicare does and doesn't cover, compare home health agencies and nursing homes in your area, plan for your long-term care needs and other information.

www.homeinstead.com -- Home Instead Senior Care site has resources for finding home care, becoming a caregiver and other elder care resources.

www.state.gov/m/dghr/flo/c23141.htm -- A U.S. State Department site on caring for elderly parents that is aimed at families posted abroad but gives very valuable general information and links.

www.caregiving.org -- National Alliance for Caregiving, a nonprofit organization focusing on issues of family caregiving.

www.caps4caregivers.org -- Children of Aging Parents, a nonprofit assisting caregivers of the elderly or chronically ill with information, referrals and support.

www.thefamilycaregiver.org -- National Family Caregivers Association, another group that educates and supports those who care for loved ones with a chronic illness or disability.

Read more of this article.

Long Term Care Insurance:   Consider mitigating the enormous financial burden of Long Term Care Insurance by researching your options at NewRetirement.com
A New Look at Annuities
The New York Times, February 4th, 2009

Re “Annuities Get Obama Fist Bump” (Your Money column, Jan. 30):

The Obama administration is rightly promoting annuities as part of its strategy to give Americans a better shot at a more secure retirement. But retirees need not sacrifice complete control of their retirement savings to enjoy a guaranteed income for life.

Many companies have begun offering their employees “guaranteed minimum withdrawal benefit” options for their 401(k)s. These hybrid provisions grant workers many of the benefits of traditional annuities, including a level of guaranteed income and income protection from volatility in the financial markets. These flexible lifetime income guarantees do not typically lock retirees into defined payout schedules.

They can also allow retirees to pass assets along to their heirs. Americans nearing retirement are understandably nervous about their financial security. Annuities and guaranteed lifetime withdrawal benefits both have an important role to play in mitigating that uncertainty and helping Americans preserve the value of their retirement savings.

Christine C. Marcks
President, Prudential Retirement
Hartford, Feb. 3, 2010

Annuity Advice for Retirement:   Evaluate and compare annuities at NewRetirement.com
Annuities: What You Need to Know
The New York Times, January 27th, 2009

Annuities are a basic staple of modern portfolios, the financial equivalent of a backstop to guarantee a minimum of income in retirement. They work like an old-time corporate pension plan, paying out a regular amount of money over the course of retirement. The big difference is that amount you receive is wholly dependent on how much you put into the annuity.

Here are the basics of annuities.

TYPES In its most basic form, an annuity is a contract with an insurance company that makes payments at regular intervals for a set period of time. The classic fixed-annuity provided people a set payment for however long they lived — from a few months to decades. An insurance company’s actuaries took their best guess on your life expectancy while you hoped to outwit them and collect a check into your 90s.

Few annuities are structured this way anymore. One reason is people have realized that a static payout is not great. For one thing, it does not account for inflation: $1,000 a month today will probably not buy as much in 10 or 20 years.

To make annuities more appealing — and to bring in more money — insurance companies created more sophisticated types of variable annuities.

Many of these annuities offer the option of a higher payment if the value of the underlying securities rises yet lock in a minimum payment if they fall.

Read more of this article.

About Reverse Mortgages:  Learn all about reverse mortgages at NewRetirement.com

Professional Financial Advisors:  Find out what a financial advisor can do for you at NewRetirement.com.

Annuity Advice for Retirement:   Evaluate and compare annuities at NewRetirement.com

NewRetirement Retirement Calculator:   Assess your retirement plan with the NewRetirement Retirement

The Unloved Annuity Gets a Hug From Obama
The New York Times, January 29th, 2009

Annuities: The official retirement vehicle of the Obama administration.

As slogans go, it’s hardly “Keep Hope Alive,” or even “Change We Can Believe In.”

But there were annuities, in a report from the administration’s Middle Class Task Force that came out this week. They are among the tools the administration is promoting as it tries to give Americans a better shot at a more secure retirement.

At its simplest, which is how the White House seems to want to keep it, an annuity is something you buy with a large pile of cash in exchange for a monthly check for the rest of your life.

If the biggest risk in retirement is running out of money, an annuity can help guarantee that you won’t. In effect, it allows you to buy the pension that your employer has probably stopped offering, and it can help pick up where Social Security leaves off.

President Obama did not discuss annuities in his State of the Union address on Wednesday night, probably figuring that viewers had enough problems staying awake. But the mere mention of them by the task force was enough to send executives at the insurance companies that sell the products into paroxysms of glee.

“I never thought I’d have the president as a wholesaler for us,” said Christopher O. Blunt, executive vice president of retirement income security at the New York Life Insurance Company. “This is awesome. I’m trying to see if I can get him to do a big broker meeting for us.”

Read more of this article.

About Reverse Mortgages:  Learn all about reverse mortgages at NewRetirement.com

Professional Financial Advisors:  Find out what a financial advisor can do for you at NewRetirement.com.

Annuity Advice for Retirement:   Evaluate and compare annuities at NewRetirement.com

NewRetirement Retirement Calculator:   Assess your retirement plan with the NewRetirement Retirement


 
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