The Wall Street Journal, March 12th, 2010
Is it too late to save your retirement?
For many, the answer is surely yes. News out this week shows that 29%
of those who have already retired have saved nothing at all to support
themselves, while only a third have saved at least $50,000.
To put this in context: A retirement account of $50,000 will provide a
65-year-old man with an annuity of just $4,000 a year.
Yet according to the latest annual retirement survey from the
Employee Benefit Research Institute, a nonprofit think tank in
Washington, two-thirds of those in retirement don't even have that much
set aside.
It's true that many will still be okay. That's because they will have
a good benefit pension, or a lot of equity in their home, or both.
Neither is counted in the survey, and both can be very important.
But neither pensions nor home values are what they once were. And
many won't even have them.
Overall, this is a pitiful state of affairs at the tail end of the
biggest financial boom in history. Today's retirees lived through the
incredible bull market that began in 1982. Bonds as well as shares
skyrocketed. Most of them should be rolling in money.
Instead they were relying on ... what? Santa Claus?
Read more of this article.
NewRetirement Retirement Calculator: For those who would rather not rely on Santa Claus, it is
vital to have a plan in mind for retirement. The NewRetirement Retirement calculator can help you ensure that you have just that.
Reverse Mortgage Daily, March 11th, 2010
During his testimony
in front of the House Financial Services Subcommittee on Housing and
Community Opportunity, David H. Stevens, Assistant Secretary of Housing
for the Federal Housing Administration voiced his strong support of the
administration’s reverse mortgage program on Thursday.
“The need for this type of program is greater now than it’s ever
been, due to increasing medical costs, declining employment/incomes, and
less “savings” in various types of pension funds/retirement accounts,”
said Stevens.
This comes as the OMB requested an appropriation of $250 million to
support the Home Equity Conversion Mortgage (HECM) in its FY 2011
budget.
Referencing a survey conducted by AARP in 2006, Stevens told the
committee the product has provided seniors with much-needed financial
relief and was primarily used to pay for long term health care, enable
home repairs, and provide piece of mind that housing expenses could be
met.
In addition, Stevens said the program plays an important role in
allowing seniors to age in place. “Keeping seniors in their homes and
communities, close to familiar support networks, puts less pressure on
our nation’s overextended nursing home infrastructure and the public
resources that support it.”
According to his testimony, FHA’s analysis showed that to maintain
the viability of the program for FY 2011, an increase in the annual
mortgage insurance premium from 0.50% to 1.25% and a further reduction
in the principal limit factors (PLFs) of approximately one to five
percent depending on the age of the borrower is necessary, on top of the
10% reduction in PLFs that was implemented at the beginning of FY2010.
If the $250 million appropriation is not provided, the PLFs will be
cut even more. ”Without the budget request, we would be forced to
reduce the PLFs by an additional 21% in FY2011. This would significantly
reduce the amount of funds that would be available to seniors (more
than 30%), which is on average a $23,000 to $27,000 impact,” said
Stevens.
Read more about this article.About Reverse Mortgages: If the above change does go into effect, it will drastically reduce the amounts available to seniors through reverse mortgages. Given this, it may be beneficial to consider getting a reverse mortgage now rather than later, or at least considering one's options in that regard at NewRetirement.com
Employee Benefit Research Institute, March 10th, 2010
20TH ANNUAL RCS: The 2010 Retirement Confidence
Survey—the 20th annual wave of this survey—finds that the record-low
confidence levels measured during the past two years of economic decline
appear to have bottomed out. The percentage of workers very confident
about having enough money for a comfortable retirement has stabilized at
16 percent, which is statistically equivalent to the 20-year low of 13
percent measured in 2009 (Fig. 1, pg. 7). Retiree confidence about
having a financially secure retirement has also stabilized, with 19
percent saying now they are very confident (statistically equivalent to
the 20 percent measured in 2009) (Fig. 2, pg. 8).
Worker confidence about paying for basic expenses in retirement has
rebounded slightly, with 29 percent now saying they are very confident
about having enough money to pay for basic expenses during retirement
(up from 25 percent in 2009, but still down from 34 percent in 2008)
(Fig. 3, pg. 9).
PREPARATIONS STILL ERODING: Fewer workers report
that they and/or their spouse have saved for retirement (69 percent,
down from 75 percent in 2009 but statistically equivalent to 72 percent
in 2008) (Fig. 11, page 14). Moreover, fewer workers say that they
and/or their spouse are currently saving for retirement (60 percent,
down from 65 percent in 2009 but statistically equivalent to percentages
measured in other years) (Fig. 13, pg. 15).
MORE PEOPLE HAVE NO SAVINGS AT ALL: An increased
percentage of workers report they have virtually no savings and
investments. Among RCS workers providing this type of information, 27
percent say they have less than $1,000 in savings (up from 20 percent in
2009). In total, more than half of workers (54 percent) report that the
total value of their household’s savings and investments, excluding the
value of their primary home and any defined benefit plans, is less than
$25,000 (Fig. 14, pg. 16).
CLUELESS ABOUT SAVINGS GOALS: Many workers continue
to be unaware of how much they need to save for retirement. Less than
half of workers (46 percent) report they and/or their spouse have tried
to calculate how much money they will need to have saved for a
comfortable retirement by the time they retire (Fig. 23, pg. 22).
Read more of this article.NewRetirement Retirement Calculator: It is never too late to start preparing for your retirement, even if you are already in it. If you're one of those whose preparations are eroding, consider the NewRetirement Retirement Calculator as a means of helping you achieve your goals.
Kaiser Health News, March 7th, 2010
Here’s the problem: By the time we need long-term care services we often
don’t have readily available resources to pay for them. Only about
seven million Americans have private long-term care insurance. And, on
average, retirees have financial assets of less than $100,000—usually in
the form of a 401(k) or other retirement plan. If a 65-year old turned
that into steady monthly income, he’d get less than $600. That would pay
for a home health aide for barely seven hours a week.
But
Americans do have a way to fund this care: their home. Last year, we had
more than $7 trillion in real estate equity, even after the crash. In
2007, nearly two-thirds of American families headed by people 62 or
older owned a home free and clear But 20 percent were “cash-poor,”
according to the MetLife Mature Market Institute, and could have used
that equity to improve the quality of their lives.
Trouble is,
two-thirds of retirees have no intention of using their homes to fund
their old age. Some want to leave houses to their kids. Others don’t
understand how they can tap their home equity, and others misunderstand
the rules about home ownership and Medicaid.
So here’s a
possible solution. What if your state, in effect, helped you turn unused
home equity into cash to pay for the care you need when you become old
and frail? To sweeten the deal, what if the state let you have easier
access to Medicaid to supplement your own long-term care contributions?
You
could use the money to make your home wheelchair accessible, or pay for
a special van, or even for adult day care or that home health aide.
You’d have far more flexibility than with regular Medicaid. In return
for this upfront cash, your heirs would repay the state with modest
interest after you die, usually by selling your house. The state wins by
saving the cost of caring for you in a nursing home. You win by easily
accessing the equity that could allow you to stay at home.
This
program would look a lot like a reverse mortgage. With those, if you are
at least 62, you can take out a loan against the equity in your home.
You get either a lump sum in cash, access to a line of credit, or a
regular check each month. When you move or die, you or your heirs sell
the house and repay the loan plus interest.
But reverse
mortgages have been a bust. In 2007, fewer than 1 percent of eligible
homeowners had one. People have trouble understanding them. And they are
weighed down by high fees (there is a servicing fee, an origination
fee, mortgage insurance premiums, closing costs, and, of course, the
interest). At the same time, a troubling number of users are relatively
young borrowers who are tapping reverse mortgages to pay off credit
cards or fund vacations. The perverse result: They will have even less
home equity available when they really need it to pay for long-term
care.
Read more of this article.About Reverse Mortgages: We at NewRetirement do not necessarily endorse the notion of getting a Reverse Mortgage specifically to purchase some other kind of financial program. The above article is correct though in describing the valuable role they can play in pursuing whatever goals you may have in retirement.
Long Term Care Insurance: A massive risk looming over most seniors heads is the threat of long term care costs. Long term care insurance can be an excellent means of mitigating this risk. Learn more about it at NewRetirement.com.
The New York Times, March 1st, 2010
“I’m 86 and have walked every day of my life. The public needs to wake
up and move.”
“I’m 83 going on 84 years! I find that daily aerobics and walking
are fine. But these regimens neglect the rest of the body, and I find
the older you get the more attention they need.”
These are two of
many comments from readers of my Jan. 12 column on the
secrets of successful aging. At the risk of sounding like a broken
record, a new series of studies prompts me to again review the myriad
benefits to body, mind and longevity of regular physical
activity for people of all ages.
Regular exercise is the only
well-established fountain of youth, and it’s free. What, I’d like to
know, will persuade the majority of Americans who remain sedentary to
get off their duffs and give their bodies the workout they deserve? My
hope is that every new testimonial to the value of exercise will win
a few more converts until everyone is doing it.
In a commentary on the new studies, published
Jan. 25 in The Archives of Internal Medicine, two geriatricians, Dr.
Marco Pahor of the University of Florida
and Dr. Jeff Williamson of Winston-Salem, N.C., pointed to “the power
of higher levels of physical activity to aid in the prevention of
late-life disability owing to either cognitive impairment or physical
impairment, separately or together.”
“Physical inactivity,” they
wrote, “is one of the strongest predictors of unsuccessful aging for
older adults and is perhaps the root cause of many unnecessary and
premature admissions to long-term care.”
They noted that it had
long been “well established that higher quantities of physical activity
have beneficial effects on numerous age-related conditions such as osteoarthritis,
falls and hip fracture,
cardiovascular disease, respiratory
diseases, cancer, diabetes
mellitus, osteoporosis,
low fitness and obesity,
and decreased functional capacity.”
One of the new studies adds
mental deterioration, with exercise producing “a significantly reduced
risk of cognitive impairment after two years for participants with
moderate or high physical activity” who were older than 55 when the
study began.
Most early studies demonstrating the benefits of
exercise were done with men. Now a raft of recent studies has shown that
active women reap comparable rewards.
Read more of this article.
Center for Retirement Research at Boston College, March, 2010
The National Retirement Risk Index (NRRI) measures the share of American
households ‘at risk’ of being unable to maintain their pre-retirement
standard of living in retirement. The Index is calculated by comparing
households’ projected replacement rates – retirement income as a percent
of pre-retirement income – with target rates that would allow them to
maintain their living standard. To make the estimates as conservative
as possible, the calculation assumes that households derive the maximum
possible income from the assets they hold at retirement. A crucial
component of that exercise is the highly unrealistic assumption that
they access their home equity through a reverse mortgage and invest the
proceeds in an inflation-indexed annuity – very few households actually
take reverse mortgages or buy annuities. This fact sheet looks at how
not taking full advantage of housing equity affects the share of U.S.
households ‘at risk.’...
Read this article.About Reverse Mortgages: One of the options discussed at length in this article is that of tapping the equity in one's home using a reverse mortgage. Consider the possibilities of this at NewRetirement.com
Annuity Advice for Retirement: Inflation-indexed annuities are a popular choice for seniors who are looking how best to invest their retirement savings so as to maximize the security of their retirement. You can learn more about these programs at NewRetirement.com
NewRetirement Retirement Calculator: Many other factors go into determining what is and is not a valid plan for your retirement. You can consider where you might need to look by running the NewRetirement Retirement Calculator.
CNN Money, March 6th, 2010
When you think of low-paying jobs, doctor doesn't usually come to
mind.
But with a 21% cut in Medicare payments slated to take
effect later this month, physicians who say they are making an OK living
may be reduced to income levels that no longer make their profession
viable. That's especially true for those still paying medical school
costs and other training.
"The cuts will hit me," said Dr. William Schreiber, a primary care
physician based in North Syracuse, N.Y.
Schreiber sees 120
patients a week. About 30% of them are enrolled directly in Medicare,
while another 65% have private insurance plans that peg their payments
on Medicare's rates. Only 5% pay on their own.
As a result,
Schreiber expects the cuts to take away $3 out of every $5 he currently
earns. And, as a primary care physician, he already wasn't earning
anything near the salary of a specialist.
"After the costs of my
own benefits are deducted, that will leave me with the equivalent of a
minimum wage job," he said.
Unless Congress acts to adjust
Medicare payments without considering the impact of rising health care
costs, Schreiber said he could be forced into bankruptcy or shut his
practice.
Cost of care
Schreiber,
who employs two nurse practitioners, agreed to break down the costs
associated with running his practice.
He spends about $60,000 a
month on "fixed costs" to run his practice. "That's more or less my
breakeven point," he said. "If I spend more, I'm in the red for the
month."
Read more of this article.
Supplemental Medicare Insurance: With or without the cuts being discussed, it's unlikely that Medicare will be able to cover all of your medical needs as you move through retirement. Consider whether purchasing supplemental insurance is the right move at NewRetirement.com
The New York Times, March 5th, 2010
AFTER 24 years as a marketing manager for Coors, Cinde Dolphin knew what
was coming — Miller and Coors had just merged their United States beer
operations, and hundreds of jobs were sure to be eliminated.
Worried that these youth-oriented companies might lay off an old-timer
like her, Ms. Dolphin decided to take a buyout and relax. She sunned on
the beaches of New Zealand, went whitewater rafting on the Yampa River
in Colorado and saw friends and Broadway shows in New York.
But after a few months, she realized that she missed working. So at age
55, she began applying for marketing jobs, confident she would be
quickly hired because of her Coors pedigree. “About four months into my
job search, I realized I wasn’t getting many callbacks,” she said.
A Sacramento resident who has survived three bouts with cancer, Ms.
Dolphin is not one to give up easily. She decided on an alternate tack —
she would start her own business and thus join the nation’s
fastest-growing group of entrepreneurs, those age 55 and above.
Mining her decades of experience, she created a marketing and public
relations firm that helps California winemakers get their message out
through Facebook, Twitter and other social
media.
“I’m having a ball,” she said. “I can set up my own hours and work
schedule, and do other things I enjoy.”
More than five million Americans age 55 or older run their own
businesses or are otherwise self-employed, according to the Small
Business Administration. And the number of self-employed people ages
55 to 64 is soaring, the agency says, climbing 52 percent from 2000 to
2007.
Like Ms. Dolphin, some use money from a buyout to finance a new company.
Some of these entrepreneurs were already retired, but after seeing
their 401(k)
retirement plans plunge in value, created a business in a quest for
extra income. Some had lost their jobs and, after months of searching
for work, started a business to make ends meet, perhaps catering,
cabinet making or doing photography.
Read more of this article.
Working in Retirement: As the above article indicates, many programs exist to help seniors who are looking to make career changes or even resume working after their retirement. You can investigate the possibilities at NewRetirement.com
The New York Times, March 5th, 2010
After the dust began to settle last year — after the banks failed, the
currency collapsed, the stock market crashed and the government fell —
the dazed inhabitants of
Iceland woke up to
another unpleasant problem:
They owed, it seemed,
some $5.3 billion to more than
300,000 angry people in the
Netherlands
and
Britain.
These were the customers of Icesave, a now notorious online retail
branch of the Icelandic bank Landsbanki, which went bankrupt in October
2008 along with 85 percent of Iceland’s banking system. The British and
Dutch governments reimbursed their citizens, but then demanded that
Iceland repay the money, the equivalent of $65,000 per household here,
plus interest.
To put it in perspective, it is as if American taxpayers were being
forced to pay $5 trillion (plus interest) to reimburse customers of the
Japanese branch of a failed private American bank, said Magnus Arni
Skulason, the head of InDefence, a group agitating for a better deal.
The question of how to pay has convulsed this tiny country of about
319,000 people, severely damaging its international reputation and
paralyzing its economic recovery. It has so incensed its residents that
on Saturday they are expected to reject overwhelmingly the latest
Icesave repayment plan, in the first national
referendum ever held here on any subject.
The vote raises larger questions about Iceland’s place in the world,
said Silja B. Omarsdottir, a political scientist at the University of
Iceland. “Are we going to be a country that takes our obligations
seriously? Or are we going to say, ‘No, we’re going to do things our
way’ and be an international pariah?”
In the scheme of world debt, $5.3 billion is small potatoes. But it
represents more than 40 percent of Iceland’s gross domestic product. The
interest alone would eat up one-fourth of the country’s revenues, said
Prime Minister Johanna
Sigurdardottir, who called finding a resolution to the Icesave
dispute “a matter of life and death for the Icelandic economy.”
The referendum was prompted on Jan. 5 by the
refusal of Iceland’s president, Olafur Ragnar Grimsson, to sign into
law the latest Icesave agreement, arrived at after months of
bad-tempered negotiations with Britain and the Netherlands and narrowly passed by a divided and
fractious Icelandic Parliament.
Mr. Grimsson’s move was unexpected but widely popular in a place that
feels bullied and ill treated.
The crisis spurred a series of demonstrations from usually phlegmatic
Icelanders, who recited poetry and tossed yogurt pots and rocks at
government buildings to protest what they deemed the greed, ineptitude
and spinelessness of the governing elite. Nearly a quarter of the
electorate signed an Internet petition against the Icesave deal.
The referendum is being closely watched abroad, where the worry is that
people in other financially flailing countries might be emboldened to
rise up and refuse to honor financial obligations stemming from the
failures of their banks.
Read more of this article.
Mainstreet, March 5th, 2010
You might not know it, but there’s an index that tracks the average
value of homes owned by Americans 65 and over — and it’s most recent
reading skews upward. Here’s why Grandma and Grandpa might be smiling
this week.
The index comes from Golden Gateway Financial, specifically from its
Reverse Mortgage index that
tracks home
values for older Americans.
In the past seven quarters, home values for U.S. seniors have either
been flat or in decline, Golden Gate reports. But that skid ended in the
third quarter of 2009, as home values for older Americans rose from
$369,762 to $381,895 in the fourth quarter of 2009.
Seniors
who reside in states that were hit particularly hard during the Great
Recession may not share in the good news. Golden Gate’s study says that
homeowners in Florida, Texas and New York saw a “significant decline” in
their home values. But senior homeowners in “flyover country” (in
states like Kansas, Iowa and Nebraska) saw significant upticks in their
homes.
Obviously, that’s good news for many older Americans who may rely on
the value of their homes to help fund a comfortable retirement. Says
Eric Bachman, chief executive officer
at Golden Gate, "Even a minimal gain in home
value is a reassuring sign for older Americans because many of these
individuals live on a fixed income and rely on their home to support
their retirement lifestyle."
Some specific data from the Golden Gate index includes:
- Self-reported senior home values rose by a little more than 3%
between the third and fourth quarter of 2009.
- The average existing forward mortgage
debt dropped slightly to $143,360.
- Statistically, home values for seniors are low compared to Golden
Gateway’s figures from 2008 levels. The average value of home in 2009
was just $390,328, down from $437,496 in 2008.
Read more of this article.About Reverse Mortgages: If your home's value is beginning to return to normal levels, then it might be time to consider your options insofar as a reverse mortgage is concerned. Learn more at NewRetirement.com.
US News & World Report, March 3rd, 2010
Paul Skidmore is hesitant to call himself retired. The former
insurance claims adjuster in Finksburg, Md., was laid off in February
2008 and has been job hunting for more
than a year. Although at 62 Skidmore is old enough to begin drawing
Social Security, he doesn't want to permanently leave the workforce. "On
the one hand, my brain is telling me go look for a job," says Skidmore,
who originally planned to retire at age 66. "On the other hand, why
bother? Just retire."
Skidmore is among a growing number of people who want to work into
their 60s but are pushed into early retirement by the weak job market.
The number of unemployed Americans ages 55 and older expressing interest
in finding a job has grown by 60 percent since the end of 2007,
according to the Bureau of Labor Statistics. But finding work has proved
difficult. The unemployment rate for older job seekers has more than
doubled since 2007 to 7.2 percent in December 2009, and the average
duration of the job search for older workers was 36 weeks in
November—far longer than the 28 weeks most younger workers remain
unemployed. Some discouraged seniors eventually give up on finding a new
job and start calling themselves retired.
Many workers may want to delay retirement to replenish decimated
401(k) portfolios, but a larger number may be forced to retire early
because of their inability to find new jobs, according
to research by Wellesley College economists. The researchers estimate
that 378,000 workers will be forced into early retirement in the next
five years because of the rising unemployment rate, about 50 percent
more people than those who will work longer to recoup stock market
losses.
Mike Reimringer, 64, of Rochester, N.Y., once planned to retire at
age 70, but he's now among the more than 1.3 million workers ages 55 and
older who are employed part time because they have no choice. Two days a
week, he works as a quality systems associate for a biological research
company. "I am certainly hoping to get bumped up to full time, and I am
continuing to job-search," says Reimringer, who was laid off from his
last full-time job in December 2008. After a year of looking for
full-time employment, he signed up for Social Security
benefits in December 2009.
Filling the gap. Workers who are at least 62 when
they lose their job have the option to sign up for Social Security benefits.
The Social Security Administration reported a 21 percent surge in
Social Security applications in fiscal year 2009, higher than the 15
percent jump that was expected as the oldest baby boomers reached
retirement. The administration's chief actuary, Stephen Goss, attributes
the rest of the increase to the weak job market. "This is a gap filler
for those people until they can get back to work," he says. "If they
don't get back to work, then these benefits will continue for the rest
of their lives."
Social Security monthly payments are reduced when they're claimed
early. "During the economic downturn, people do start retiring more, and
they start doing that at exactly the age at which Social Security
becomes available," says Phillip Levine, a Wellesley College economist.
"But their Social Security benefits are less than they would have been
otherwise." Checks are reduced by 20 to 30 percent for workers who claim
benefits at age 62. Those who postpone retirement will see their checks
increase by 7 to 8 percent for each year they delay between ages 62 and
70.
Read more of this article.
Working in Retirement: Retired too early? Retired involuntarily? While it can be difficult, especially in today's job market, there are programs that can assist seniors in returning to the workforce. Look into the options at NewRetirement.com.
The New York Times, March 3rd, 2010
Last Friday, the United States Department of Labor proposed a new
rule governing investment advisers’ fees intended to help better
protect, and increase, workers’ retirement savings.
We covered some of the details and background of the proposed rule in
this
post. But here’s a bit more from one mutual fund shareholder
advocate on how the proposed rule varies from an earlier version
scratched by Democrats and what it may mean for consumers.
According to Mercer Bullard,
a law professor at the University of Mississippi School of Law and
founder of the Fund Democracy,
a advocacy group for mutual fund shareholders, the initial Department
of Labor rule specified only that the fees or compensation received by
an individual adviser providing investment advice not vary depending on
the investments selected by the participant and did not apply to the
adviser’s firm.
In contrast, the new provision of the rule applies the fee
limitations to both the adviser and his or her firm.
To illustrate the difference, Mr. Bullard pointed out the different
language in the two rules. Here’s the exact relevant language of the new
proposed rule: “No fiduciary adviser (including any employee, agent or
registered representative) that provides investment advice receives from
any party (including an affiliate of the fiduciary adviser), directly
or indirectly, any fee or other compensation (including commissions,
salary, bonuses, awards, promotions or other things of value) that is
based in whole or in part on a participant’s or beneficiary’s selection
of an investment option.”
And here’s the language from the earlier rule: “Any fees or other
compensation (including salary, bonuses, awards, promotions, commissions
or other things of value) received, directly or indirectly, by any
employee, agent or registered representative that provides investment
advice on behalf of a fiduciary adviser does not vary depending on the
basis of any investment option selected by a participant or
beneficiary.”
This is the gist for consumers: “You are much more likely to get
objective advice from your adviser” under the proposed rule, said Mr.
Bullard, who had critiqued
the earlier rule’s language.
Read more of this article.Professional Financial Advisers: As the new rules are implemented, you should consider how a financial adviser can potentially help you navigate retirement. Learn more about how the relationship works at NewRetirement.com
The Wall Street Journal, March 3rd, 2010
In the wake of the worst stock market performance in decades, there's
a drive under way to include a new type of product in 401k plans: an
annuity-style investment that gives retirees guaranteed income
for life.
A number of insurers, eager to grab a share of the
baby-boomer retirement market, are introducing these products for
retirement plans. Besides the guaranteed income, proponents say these
investments offer greater fee transparency and withdrawal options than
traditional annuities and can even be folded into target-date mutual
funds.
"It's the salient issue as the baby boomers start to retire," says
Steven Utkus, who oversees Vanguard
Group's Center for Retirement Research. "How are they going to take lump sums
(at retirement) and make something of them to last the rest of their
lives?"
There's one big problem, though: Many investors just don't
seem to want these annuities, even if a bevy of financial experts say
the products are in their best interest. Meanwhile, many employers don't
want the burden of choosing -- or taking responsibility for --
investments that promise to protect their employees for the rest of
their lives.
Why are investors reluctant to opt for these
annuity-type investments? A big part of it is people's long-standing
perceptions. Annuities, offering fat commissions to those who sold them,
have developed a reputation for sales abuses. They require you to cede
control of the money to an insurance company. And some people fear
they'll die before receiving the financial benefits.
For an idea
of how reluctant people are to take the annuity plunge, consider this:
Money-purchase plans -- similar to 401k's
-- are required to offer annuities as a way to take distributions come
retirement. But Vanguard's Utkus says that among such programs overseen
by his company, "the rate at which people exercise that option is
negligible, like 5%."
Read more of this article.
Annuity Advice for Retirement: The value of annuities, and annuity-like products, such as the ones discussed above, depends entirely on your goals and financial situation. Research Annuities at NewRetirement.com and find out if they will work for you.
The New York Times, March 3rd, 2010
Earlier today Casey B. Mulligan wrote
about how the entry of more women into the work force has helped
sustain the solvency of Social Security, which has been otherwise
stressed by the size of the retiring baby boom generation and longer
life expectancies.
The decisions by many more women to trade
in their aprons for pantsuits in the last few decades meant that
there were more workers paying Social Security taxes — taxes that
financed the Social Security paychecks given to this growing army of
older Americans.
But what happens now that the actual and relative size of
entitlement-receiving elderly America continues to grow? Can we induce
yet another untapped labor pool to enter the American job
market and replenish their elders’ Social Security funding?
We can. Indeed, to some extent, we already have.
Part of what has saved the United States from some of the
entitlement-funding problems plaguing our peers in Japan and Western
Europe is immigration, says Stephen Ansolabehere, a professor of
government at Harvard.
“Immigrants are younger than the typical American,” Professor
Ansolabehere told me in an interview about the long-term fiscal
challenges facing the United States. “These people are entering the work
force and paying taxes, Social Security taxes, that sustain these
programs.”
Read more of this article.Social Security Optimization: Whether or not the above is correct, it never hurts to look into one's options with social security and see how best to optimize the benefits from the government. You can do so at NewRetirement.com
Marketwatch, March 2nd, 2010
Time to kick the long-term-care insurance tires?
It’s one thing to know how the much the average 65-year-old couple
free from chronic disease can expect to spend on health care in
retirement. Those costs – not including nursing-home costs – average
$197,000, but can exceed $311,000, according to a just-published report
from the Center for Retirement Research at Boston College.
The harder part is getting a handle on the risks of incurring
unusually high costs, especially nursing-home-care costs. Consider: At
age 65, a typical married couple free of chronic disease can expect to
spend $260,000 on remaining lifetime health-care costs – including
nursing-home care. But there’s a 5% chance that health-care costs
–including nursing-home care – will exceed $570,000, according to the
report, which was underwritten by Prudential.
Not surprisingly, just 15% of households approaching retirement have
accumulated that much in their nest egg.
So what should the average or not-so-average American do given the
above? Save more? Invest more aggressively? Spend less? Draw down their
nest egg more slowly? Work longer in a job that provides health care?
Marry a rich widow or widower? Die sooner?
For its part, Prudential said that when people decide how much to
save for retirement, and how rapidly to draw wealth during retirement,
they need to consider the following:
- What risk they are prepared to accept of having their
assets substantially depleted by health-care costs
- Whether they are above or below the average risk of
incurring exceptionally high costs
- Whether they should insure against health-care costs by
purchasing long-term care insurance.
Read more of this article.Long Term Care Insurance: Long Term Care Insurance can help alleviate one of the biggest risks that comes with retirement, that of long-term, savings-draining health care costs. You can see if buying Long Term Care insurance makes sense in your situation by browsing the information at NewRetirement.com