NewRetirement Retirement News Digest

How to Salvage Your Retirement

2010-03-13T04:36:00Z

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.

Without $250 Million HECM Subsidy, Big Principal Limit Reduction Needed says FHA

2010-03-13T04:33:00Z

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

The 2010 Retirement Confidence Survey: Confidence Stabilizing, But Preparations Continue to Erode

2010-03-13T04:30:00Z

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.

Public Reverse Mortgages and Long-Term Care: Can They Work Together?

2010-03-11T21:36:00Z

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.

Even More Reasons to Get a Move On

2010-03-11T21:26:00Z

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.

Fact Sheet: "The NRRI and the House"

2010-03-11T20:55:00Z

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.

I'm a Medicare doctor. Here's what I make

2010-03-09T21:09:00Z

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

Starting Over at 55

2010-03-09T19:40:00Z

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

Iceland Voters Set to Reject Debt Deal

2010-03-09T18:07:00Z

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.

Home Values for Seniors on the Rise

2010-03-06T01:14:00Z

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.

Job Search Grows Cold, Creating Reluctant Retirees

2010-03-05T01:23:00Z

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.

More on a Proposed Rule on Retirement Savings

2010-03-05T01:15:00Z

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

A guarantee for your 401k?

2010-03-05T01:06:00Z

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.

Why Old People Should Love Immigrants

2010-03-04T02:18:00Z

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

Health-care costs in retirement are the third certainty in life

2010-03-04T02:13:00Z

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