Posted on October 30, 2006 by Jason
KCRA.com, October 30th, 2006
Elderly homeowners have plenty of equity in their homes once their
mortgage is paid off, but for those who live on a fixed income, paying
for anything outside of normal expenses can pose challenges.
Reverse mortgages can offer senior citizens a way to solve the house-rich, cash-poor dilemma without risk to their heirs.
Reverse mortgages allow homeowners to turn the value of their home into
cash, and they don’t have to pay back until they die, sell the home or
permanently move from the house, according to AARP.com. Browyn
Belling, the AARP Foundation’s reverse mortgage specialist, said the
loans are a relatively new way to tap into home equity for those who
are 62 and older.
In a conventional “forward” mortgage,
homebuyers borrow a lump sum and make monthly payments, reducing the
principal and interest over time. But with a reverse mortgage, there
are no monthly payments.
“You don’t have to pay anything back for
as long as you stay in your home; 85 percent of our survey respondents
want to stay in their homes. Reverse mortgages let them tap that
equity,” Belling said.
Read more of this Article. Learn more about Reverse Mortgages.
Posted on October 30, 2006 by Jason
USA Today, October 29th, 2006
Gordon Musch stares into a computer monitor and listens while an insurance counselor peppers him with unfamiliar terms.
For Musch, like millions of other seniors and
people with disabilities, it’s time to learn again about Medicare’s
prescription-drug program. It was confusing the first time around. Now,
there are even more plans to consider for 2007. The enrollment period
begins Nov. 15 and ends Dec. 31, but officials say those who wait past
early December could face delays.
The lowest-priced premiums have risen
considerably. Lists of covered drugs have changed, as have rules that
must be followed to get coverage.
And plans that last year provided continuous
insurance throughout the year for all drugs now have a “coverage gap”
for brand-name drugs. Most plans have a gap that begins when total drug
costs reach $2,250 and ends when the beneficiary has spent $3,600 out
of pocket.
For all those reasons, experts say, virtually everyone in the program should shop around.
Read more of this article.
Posted on October 26, 2006 by Jason
The Shreveport Times, October 26th, 2006
Review your current health-care benefits package and plan early.
That’s the message the Council on Aging is urging local seniors to keep in mind.
The council is one of several local agencies providing assistance to
help them prepare for changes in Medicare Part D to take place Nov. 15.
“This is for anyone who has not yet signed up for Medicare Part D. Now
we might also have some new people that have just turned 65. If they
have turned 65 and have Medicare Plans A and B, this is the time to
sign up for Part D,” explained Caddo Council on Aging Director Mary
Alice Rountree.
Rountree
explained that on the Nov. 15 date, eligible seniors can start signing
up or changing their current Medicare Part D plan.
“You’ll also
have people who want to re-evaluate their current plan and say ‘Is my
plan the best plan?’ Many signed up in January and February and some
waited until May, so they only had six months on the plan,” Rountree
said. “This time when they sign up in November, the changes will take
effect Jan. 1 and they will be on the plan for the entire year.”
Read more of this article.
Posted on October 26, 2006 by Jason
Center for Retirement Research at Boston College, October 26th, 2006
The U.S. retirement income system faces an enormous challenge as the
transition to a much older society begins. Fewer employers sponsor traditional
defined benefit pension plans. Their replacement, the now dominant defined
contribution (e.g., 401(k)) plans, are failing to produce the accumulations that
baby boomers will need for a secure retirement. And the backbone of the
retirement income system, Social Security, faces a long-term shortfall. This
situation has policymakers looking for new funding options.
One such
option gaining support is investing a portion of Social Security funds in
potentially higher-yielding equities. Munnell and Sass explore whether equities
could help solve the woes facing the U.S. retirement income system in general,
and the Social Security shortfall in particular. They examine the experiences of
three nations that added equities to the investment mix of their retirement
systems—the U.K., Australia, and Canada. As these experiences show, while
equities promise higher returns than government bonds, how they are
implemented—as add-ons, carve-outs, or as trust fund supplements—matters
greatly.
Read more of this article.
Posted on October 24, 2006 by Jason
WABC TV, October 24th, 2006
These days, the Baby Boomers are
approaching retirement. Most of their parents, too, are still living.
This unprecedented population of elders has given rise to new financial
tools. One among them seems all the rage: the reverse mortgage.
Reverse
mortgages can be good tools to help retiring Americans’ financial
stability. But, as with any financial service, potential borrowers need
to be careful with whom they do business and beware of scammers looking
to take advantage of unsuspecting victims. Most commonly, scammers
promoting reverse mortgages try to take a fee for providing “help” that
is available for free. Some unsavory lenders offer loans to people who
will not benefit from the reverse mortgage, simply to take their cut.
By
becoming educated consumers, people can avoid these traps and decide if
a reverse mortgage is the best course. While these loans can be
appealing (instead of making monthly payments, the bank pays you each
month), they also are complex. Key components include:
- Reverse mortgages are available to borrowers age 62 or older.
- To
qualify, you must have a significant amount of equity built up in your
home. Homeowners with little equity will not gain enough from a reverse
mortgage to make it worthwhile.
- Unlike a home equity line of
credit, there is no monthly payment on a revere mortgage. A reverse
mortgage pays you, the borrower, and is available regardless of your
current income.
- Reverse mortgages typically having closing
costs (fees) that are higher than those associated with a traditional
second mortgage or home equity line of credit.
- You must pay off any existing mortgages with the proceeds from the reverse mortgage.
- The
loan comes due when you sell the house, move out of the house or pass
away. Thus, your home will not be left free and clear to your heirs.
Heirs must repay the loan if they wish to keep the home.
Read more of this article. Learn more about Reverse Mortgages.
Posted on October 20, 2006 by Jason
Detroit Free Press, October 19th, 2006
Social Security checks for nearly 49 million retirees will increase
3.3% next year, an average increase of $33 a month, the Social Security
Administration said Wednesday.
The cost-of-living adjustment
means the monthly benefit for the typical retiree will go from $1,011
to $1,044. Another 4 million people who get Supplemental Security
Income will also get the increase.
Part of the increase, however,
will go to a $5 increase in the payments retirees must make for
Medicare Part B, which pays for doctor visits and other outpatient
care. Part B payments had increased $10.30 a month this year.
Some details:
•
The average retired couple, with both receiving Social Security
benefits, will see their monthly check go from $1,658 to $1,713.
• The standard SSI payment will go from $603 a month for an individual to $623, and from $904 to $934 for a couple.
Read more of this article.
Posted on October 20, 2006 by Jason
Yahoo Finance, October 19th, 2006
As you look ahead to retirement — or, if you’ve already entered those years,
consider ways to reshape it — odds are you may think about some kind of
employment, not just to keep the paychecks coming but to stay busy, productive,
and involved.
Don’t be put off by rampant misconceptions about older workers. You can pull
your weight at the office well past 65, and employers are beginning to realize
it — and count on it.
Clearly, some occupations are unappealing or even off limits for older
employees, who may work less swiftly or and some can possibly struggle with
physically strenuous tasks. Yet contrary to popular belief, workers over 55
don’t sustain more work injuries or absences — younger workers do.
Moreover, more and more thoughtful employers are adjusting their work
environment and benefits — -doing things like improving lighting and acoustics
and offering regular health screening and fitness programs — to accommodate
workers of all ages and capabilities.
Read more of this article.
Posted on October 18, 2006 by Jason
MSNBC, October 18th, 2006
The title of this article is more ominous
than its content. I don’t expect you to have to decide whether you want
to own a home or retire comfortably. I think you can have both — if
you plan well. But I recently ran across some interesting information
about how you might want to spend your extra dollars.
One obvious choice that many of us face when we’ve got some extra money
to sock away is whether to apply it to our mortgage or our retirement.
An extra mortgage payment is attractive because it reduces our
principal and will cost us less in interest payments in the future. It
also offers a guaranteed return. If your mortgage is at 6.5%, you’ll
essentially earn that by not having to pay it on your
principal-reduction amount. Socking the money away for your retirement
is also attractive, as we all know that the more we save and invest for
retirement (and the earlier we do so), the better off we’ll likely be
when our golden days arrive.
So what’s the right choice? Well, our friends at the National Bureau of
Economic Research recently released a report by Gene Amromin, Jennifer
Huang, and Clemens Sialm that will inform your decision. Here’s their
abstract:
Read more of this article.
Posted on October 17, 2006 by Jason
For reasons ranging from a need to pay the bills to the desire for personal fulfillment, more older individuals are opting for a post-retirement return to the workforce.
Miami Herald, October 16th, 2006
Remember when folks worked for the same company for decades,
collected gold watches at age 65, moved to Florida and spent the rest
of their lives playing shuffleboard? Call it your father’s — or, more
accurately, your grandfather’s — retirement, since more and more older
individuals are opting for a post-retirement return to the workforce or
skipping retirement altogether.
Anita Campbell, founder and editor of Small Business Trends
(smallbiztrends.com), calls the concept ”un-retirement” and says that
while baby boomers are the driving force toward a balance of work and
leisure as we age, individuals in their 60s, 70s and beyond are also
exploring new careers.
Motivation varies for remaining in the workplace. For individuals
who need to supplement current retirement income or build a nest egg,
it’s an economic necessity. For others, it’s about the connection,
satisfaction, mental stimulation and sense of identity a job provides.
Read more of this article.
Posted on October 17, 2006 by Jason
Bankrate.com, October 6th, 2006
Dear
Dr. Don,
My
mother has been having problems with a financial adviser whom she has
known since his childhood. (She is friendly with his mother.) I believe
he doesn’t have her best interests at heart. How can we find a
competent person who isn’t just interested in receiving commissions?
This current person is batting less than 20 percent, winners verse
losers. I know there are no guarantees, but the current situation is
dreadful. She started with over $250,000 12 years ago and only draws
$650 dollars a month. Now she only has $75,000 left and he is
recommending a reverse mortgage for her. Help! She is 72 years old and
owns her home currently worth about $250,000. What can we do? Thank
you, — Richard Retrodict
Dear
Richard,
While
the stock market has had some rocky times over the past 12 years, it’s
averaged a 10.5 percent annual return in the past 12 years (1994-2005)
as measured by the S&P 500 index. I’m sure it’s hard to see an
investment account that started with a quarter of a million dollars
shrink to just 30 percent of that value given your mother’s
conservative draws of $650/month.
I’m
going to assume that nothing is actionable in how the account was
managed. (You may not want to make that assumption.) What’s paramount
is to help your mother make her best decisions with the remaining
assets she has under her control. The reverse mortgage, while an
expensive proposition because of its high closing costs, isn’t
necessarily the wrong decision, but I think she should consider a
different course of action first.
Read more of this article.
