Posted on May 12, 2006 by Jason
Forbes, May 10th, 2006
As I see it, America is facing a retirement crisis. Picture a scenario
where most people hit age 60 or 65 and have no choice but to keep
working, asking to stay on in their current jobs; or if pushed into
“retirement,” forced to find a new, lower-paying job at an age when
many will be unemployable.
At the rate we’re going, this could become the unfortunate fate for
a frightening number of today’s workers. It presents a big problem for
the country and for the people that work in its companies. Now is the
time to tackle it.
How did we get into this mess? It’s simple:
Think of retirement funding as a three-legged stool, in which needed
savings comes from the workplace, the government and from personal
savings.
Traditional pension plans are in jeopardy. Witness the recent decision by IBM to freeze its pension plan or the push by General Motors
and Ford to scale back their pension obligations to remain solvent.
Read more…
Posted on May 11, 2006 by Jason
San Jose Mercury News, May 10th, 2006
It’s no secret that baby boomers have not been very diligent about saving for
retirement, but that doesn’t mean they don’t have assets. Many live in homes
that have appreciated greatly in value in recent years as real estate prices
have soared.
Some financial experts believe that’s going to be the boomers’ salvation
because they will be able to tap that home equity to help fund their
retirements.
The main sources of retiree income traditionally have been Social Security
benefits, pensions, savings and working during retirement.
“But fewer people are getting pensions, and many haven’t saved enough,” said
Gillette Edmunds, co-author with financial planner Jim Keene of the newly
published “Retire on the House.” “If that’s the case, you have to look at where
the money is and use that to fund retirement – and for many that will mean
figuring out how to use your home equity.”
Read more…
Posted on May 10, 2006 by Jason
6.5 million seniors have 6 days to make sense of the Medicare maze and pick a plan
Chicago Tribune, May 9th, 2006
Just days before the deadline, Larry
Mayer still can’t decide what to do: Should he sign up for Medicare’s
new drug program and pay almost $800 more a year for his medications?
Or should he keep buying drugs from Canada and Sam’s Club and risk
having to pay a penalty if his situation changes and he needs the
program later?
More than 6 million Americans face similarly vexing decisions as the program’s May 15 enrollment deadline approaches.
This is the first time Medicare is paying for prescription drugs,
an essential and expensive treatment for most seniors, and the largest
expansion of the government health plan in more than 40 years. But
persuading seniors to sign up has been an uphill battle.
Like Mayer, large numbers of people are baffled by the complexity
of Medicare’s drug benefit, which is being administered by dozens of
private companies. And like him, they’re weighing the costs of joining
against the benefits, and worrying about a financial penalty for people
who don’t sign up in time. The fine is 1 percent of an average drug
plan’s monthly premium.
Read more…
Posted on May 10, 2006 by Jason
CNS News, May 9th, 2006
Former
vice presidential nominees — Democrat John Edwards and Republican Jack
Kemp — are teaming up to promote the concept of saving money for
retirement.
Their message is aimed at people who don’t understand the investment options already available to them.
Edwards,
a former U.S. senator from North Carolina who served as John Kerry’s
vice presidential running mate in 2004 and Kemp, a former congressman
from New York who served as Bob Dole’s running mate in 1996, are
pitching a new project that challenges corporations to automatically
enroll employees in 401(k)s and Individual Retirement Accounts.
It’s
an effort to turn the United States into a nation of savers, said the
Retirement Security Project – an initiative supported by The Pew
Charitable Trusts in partnership with Georgetown University’s Public
Policy Institute and the Brookings Institution.
Read more…
Posted on May 10, 2006 by Jason
Houston Chronicle, May 9th, 2006
Senate Democrats threatened Tuesday to filibuster Republican-backed
legislation they said would scale back health insurance for millions.
Republicans said the measure would allow small businesses to offer
coverage to more workers.
The legislation, sponsored by
Sen. Mike Enzi, R-Wyo., would enable businesses to join across state
lines to buy health insurance. The pooling would give them enough clout
to negotiate better rates, Enzi said.
“This is something that the small businesses have been asking for for almost 15 years,” said Enzi, R-Wyo.
Democrats
said the resulting plans would not meet people’s needs when they get
sick because the legislation would pre-empt state requirements for
certain coverage, such as mammograms or diabetes supplies. However,
Enzi’s aides said he would support some mandated coverage if a majority
of the states require it. For instance, 49 states require the coverage
of mammograms, so they would be allowed to continue that coverage.
Read more…
Posted on May 10, 2006 by Jason
Washington Post, May 9th, 2006
This is the season of renewal, with flowers blooming everywhere and
plant allergens wafting through the air. Gesundheit! But for Social
Security junkies, this is the time to pore over Social Security’s
newest annual trustees report.
The 2006 report, issued last week,
seems largely unchanged from last year. Social Security is still
projected to start taking in less cash than it spends in 2017 and to
exhaust its trust fund in 2040, rather than in 2039.
But things are actually worse than last year, because crunch time –
when the program starts running a cash deficit — has crept a year
closer. Examine this report dispassionately and you see future cash
shortfalls so immense that there’s no realistic way to cover them. Cash
is what matters, because Social Security’s multitrillion-dollar trust
fund, consisting of IOUs from the U.S. Treasury, won’t help the federal
government cover shortfalls when the program begins taking in less than
it spends.
Read more…
Posted on May 10, 2006 by Jason
Reuters, May 9th, 2006
First mortgage originations jumped 14 percent in the second half of
2005 with demand for fixed-rate loans climbing as the Federal Reserve’s
campaign of interest-rate hikes began to affect home-buyers’ activity,
a trade group said on Tuesday.
The Mortgage Bankers Association
said fixed-rate products accounted for 47 percent of loan originations
in the second half of last year, up from 42 percent in the first half.
Demand for fixed-rate interest-only loans jumped to 13 percent of
origination volume in the second half from 7 percent in the first.
“As short-term rates increased over the second half of 2005, homeowners
moved away from adjustable rate loans into fixed-rate loans,” said Doug
Duncan, the group’s chief economist.
Read more…
Posted on May 10, 2006 by Jason
Financial Freedom Senior Funding Corp. could go public
MarketWatch.com, May 1st, 2006
IndyMac Bancorp Inc. said Monday said it’s considering an initial public
offering for its Financial Freedom Senior Funding Corp. as net income at the
reverse mortgage unit doubled in the first quarter.
The Pasadena, Calif.-based IndyMac Bancorp Inc. (NDE)
said the IPO would drive “growth and
opportunities” for Financial Freedom, help attract and retain talent, raise cash
and enhance shareholder value.
The official announcement came after CEO Michael Perry told
analysts last Tuesday that the company is “close” to staging the IPO.
“We see the … reverse mortgage business being one that
demographically has enormous growth potential,” Perry told analysts. “Financial
Freedom has the number one franchise in that business.”
Read more…
Posted on May 10, 2006 by Jason
Medicare Part D is only the starting point for a far larger opportunity
The McKinsey Quarterly, May 10th, 2006
Now that the Medicare Modernization and Improvement Act
of 2003 is in force, large US health insurers are eagerly competing to sign up
current retirees for new Medicare products, including the Part D drug benefit
and a revamped Medicare Advantage program. The market is a sizable one: in 2006, Medicare
products sold to current retirees could generate $150 billion in revenues and as
much as $8 billion in profits for health insurers. The annual profits will
probably at least double by 2014. But there’s an even more promising opportunity
for insurers: future retirees—notably a large number of aging baby boomers—face
drastically increased out-of-pocket health care bills because of a significant
reduction in employer-funded benefits, greater longevity, and ever-rising
medical expenses.
Products to help retirees plan for and manage that spending could generate an
estimated $80 billion in revenues and $12 billion in profits for health insurers
and other financial institutions by 2014.
Read more…
(This article requires a free registration to read in full)
Posted on May 5, 2006 by Jason
Business Week, May 5th, 2006
Let’s assume that you have a perfect, carefully
thought-out financial plan for your retirement — one that takes into
account routine expenses such as housing, food, and medical care,
extras such as travel, and even a stay in a nursing home. You’ve made
sure that the money you have in savings, your 401(k), other
investments, and home equity will suffice to cover all these expenses
through a long life.
Though you think you’ve covered all the bases, it may
be time to redo the plan. The Deficit Reduction Act of 2006 signed by
President Bush in February enacted new provisions that will make it
more difficult for you, your spouse, your elderly parents, or your
in-laws to qualify for Medicaid funding if any of you must go to a
nursing home. When he signed the bill, the President said it “tightens
the loopholes that allowed people to game the system by transferring
assets to their children so they can qualify for Medicaid benefits.”
Vincent
Russo, a Westbury, N.Y., elder-law attorney, has a different take on
the new law. He says the changes it contains “signal a curtailment of
access to long-term care services under Medicaid.” Both the President
and Russo were referring to revisions in the rules on “Medicaid asset
transfers,” or strategies that families may use to reduce their assets
in order to qualify for Medicaid nursing home care.
Read more…
