Posted on January 24, 2006 by Steve
SF Gate, January 22nd, 2006
For home builders, they are among the weightiest
questions for the next 20 years: Where will the Baby Boomers move when
they sell the homes where they’ve raised their families?
Will they opt for the stereotypical post-retirement
golf course communities so popular in the 1980s and ’90s? Will they
head for new beach and ski resort real estate developments? Or will
they downsize and move to a center city condo to maximize use of
cultural attractions and avoid long commutes?
With more than 70 million Boomers heading down the
demographic conveyor belt toward retirement — and the oldest of them
hitting 60 this year — no wonder these questions were prominent at the
National Association of Home Builders’ annual conference here Jan.
11-14.
Although consumer survey research has shown for
decades that homeowners in their 40s and 50s often have no detailed
plans to downsize or sell their houses, a new statistical study
unveiled at the convention suggests that the Boomers might have
different ideas.
Read more…
Posted on January 21, 2006 by Steve
New York Times, January 21st, 2006
CAUTION: Reading this article may provoke self-inflicted slaps to
the head and utterances of “Why didn’t I do this five years ago?”
In 1999, Farhad Aghdami, a
trust lawyer in Richmond, Va., suggested to Jim and Yolonda Roberts
that they put their home in a Qualified Personal Residence Trust to
shelter it from looming estate taxes.
Piedmont Lodge, the
Robertses’ white clapboard house with six portico columns sitting on 53
acres near Keswick, Va., was worth about $1.6 million back then. The
trust lets them give the property to their four children for about a
third of what it was valued at in 1999. The couple, now 75 years old,
can live in the home for the 10-year term of the trust. When the trust
expires in three years, the house belongs to the children.
Here’s
where you slap yourself. The home is probably worth close to $4 million
now. All of that appreciation was removed from the Roberts estate. “We
are very happy with how it worked out,” said Mr. Roberts, a retired
Exxon executive. “We love the house and wanted to keep it in the
family.”
Read more…
Posted on January 20, 2006 by Steve
Seniors Being Turned Away, Overcharged Under New Prescription Drug Program
The Washington Post, January 14th, 2006
Two
weeks into the new Medicare prescription drug program, many of the
nation’s sickest and poorest elderly and disabled people are being
turned away or overcharged at pharmacies, prompting more than a dozen
states to declare health emergencies and pay for their life-saving
medicines.
Computer glitches, overloaded telephone lines and
poorly trained pharmacists are being blamed for mix-ups that have
resulted in the worst of unintended consequences: As many as 6.4
million low-income seniors, who until Dec. 31 received their
medications free, suddenly find themselves navigating an insurance maze
of large deductibles, co-payments and outright denial of coverage.
Yesterday, Ohio and Wisconsin announced that they will cover the
drug costs of low-income seniors who would otherwise go without,
joining every state in New England as well as California, Illinois,
Pennsylvania, Arkansas, New Jersey, North Dakota, South Dakota and New
Jersey.
“This new prescription drug plan was supposed to be a
voluntary program to help people who didn’t have coverage,” said Jeanne
Finberg, a lawyer for the National Senior Citizens Law Center. “All
this is doing is harming the people who had coverage — America’s most
vulnerable citizens.”
Read more…
Posted on January 20, 2006 by Steve
Are reverse mortgages the right direction for older Americans?
MarketWatch, January 20th, 2006
The number of Americans
over age 65 is expected to double in the next 30 years to 70 million.
And those older Americans will be living longer. But with one of the
lowest savings rates in the world, just what will they live on?
In the years to come, more and more retirees are likely to be
looking to tap one of their largest assets to get by financially –
their home equity. Reverse mortgages are one option they might consider.
The National Reverse Mortgage Lenders Association says 48% of
American households with at least one resident age 62 or older are
candidates for a reverse mortgage, and could receive an average of
$72,128 from a reverse mortgage.
With a reverse mortgage the lender makes payments back to the
homeowner. To qualify for this type of loan, the home must be main
residence. The loans must be repaid in full, including all interest and
other charges, when the last living borrower dies, sells the home or
permanently moves away.
Because you make no monthly payments, the amount you owe grows
larger over time. As your debt grows larger, the amount of cash you
would have left after selling and paying off the loan generally grows
smaller. The good news is that you can never owe more than your home’s
value at the time the loan is repaid.
Read more…
Posted on January 9, 2006 by Steve
The New York Times
The death knell for the traditional company pension has been tolling
for some time now. Companies in ailing industries like steel, airlines
and auto parts have thrown themselves into bankruptcy and turned over
their ruined pension plans to the federal government.
Now, with the recent announcements of pension freezes by some of the cream of corporate America – Verizon, Lockheed Martin, Motorola and, just last week, I.B.M.
- the bell is tolling even louder. Even strong, stable companies with
the means to operate a pension plan are facing longer worker lifespans,
looming regulatory and accounting changes and, most important,
heightened global competition. Some are deciding they either cannot, or
will not, keep making the decades-long promises that a pension plan
involves.
I.B.M. was once a standard-bearer for corporate
America’s compact with its workers, paying for medical expenses,
country clubs and lavish Christmas parties for the children. It also
rewarded long-serving employees with a guaranteed monthly stipend from
retirement until death.
Most of those perks have long since
been scaled back at I.B.M. and elsewhere, but the pension freeze is the
latest sign that today’s workers are, to a much greater extent, on
their own. Companies now emphasize 401(k) plans, which leave workers
responsible for ensuring that they have adequate funds for retirement
and expose them to the vagaries of the financial markets.
Read more…
Posted on January 8, 2006 by Steve
Pew Research Center, December 8th, 2005
As the oldest of the nation’s 75 million baby boomers
approach the age of 60, a Pew Research Center survey released today
finds many are looking ahead to their own retirement while balancing a
full plate of family responsibilities – either raising minor children
or providing financial and other forms of support to adult children or
to aging parents.
In the past year, 50% of all boomers were raising one
or more young children and/or providing primary financial support to
one or more adult children, while another 17% whose only children are
ages 18 and older were providing some financial assistance to at least
one such child, according to the survey. In addition, the survey finds
that two-in-ten boomers were providing some financial assistance to a
parent. Few boomers bear all these responsibilities simultaneously; the
survey finds that about 13% are providing some financial support to a
parent at the same time as they are also either raising a minor child
or supporting an adult child.
Read more…
Posted on January 8, 2006 by Steve
The New York Times, January 6th, 2006
I.B.M.,
which has long operated one of the nation’s largest corporate pension
funds, said yesterday that it would freeze pension benefits for its
American employees starting in 2008 and offer them only a 401(k)
retirement plan in the future.
The company said that
the shift, which is expected to spur still more major companies to move
away from traditional defined-benefit pension plans, would save it as
much as $3 billion through the next few years and provide it with a
“more predictable cost structure.”
I.B.M.’s announcement came at
a time when a number of large employers have been freezing their
pension plans, meaning that employees no longer build up retirement
benefits to reflect higher pay and additional years of employment. Verizon, Hewlett-Packard, Motorola and Sears are among those that have recently frozen pension plans for many employees.
But
the move by I.B.M., a financially healthy company, shows that even some
of the most secure businesses in the country no longer want to bear the
risk or the expense of providing a firm promise of a lifetime pension.
Read more….
Posted on January 8, 2006 by Steve
Bankrate, January 5th, 2006
It’s time to consider whether to keep your home equity
line of credit or get rid of it.
Rates on credit lines have been rising for a year
and a half. Meanwhile, long-term mortgage rates have been falling
for a month and a half. This up-down combination gives borrowers
a chance to pay off their credit lines with other types of loans.
To decide whether it makes sense to ditch your credit
line, you have to do some math and think about the price you’re
willing to pay for the flexibility of having a credit line.
If the math in this article makes your head hurt,
you can ask a mortgage broker or loan officer to crunch the numbers.
Home
equity lines of credit, known to mortgage geeks as HELOCs, usually
go up and down with the prime rate. Credit lines were a great deal
for borrowers from June 2003 to June 2004 because the prime rate
was 4 percent during that time. A lot of homeowners got HELOCs at
prime or close to it. Credit lines remained attractive even after
the prime rate began its slow rise in the middle of 2004 because
the rates still were relatively low — for a while.
Read more…
Posted on January 2, 2006 by Steve
The web address below has the reverse mortgage act as released from
the Congressional Budget Office.
http://www.cbo.gov/showdoc.cfm?index=6971&sequence=0&from=7
Posted on January 2, 2006 by Steve
The Herald Tribune, December 12th, 2005
Ronnalyn Crain plans to retire in about three years, but she’s not as worried about her finances as she was in the past.
Crain
has accumulated modest savings from her career as a rental property
manager. She’s expecting a monthly Social Security check from the
government. But what’s really going to put her over the top, she says,
is a reverse mortgage.
That will allow her to tap into the roughly $300,000 in equity she has built in the house she purchased for $32,000 in 1972.
Read more
