Posted on November 28, 2006 by Jason
The Guardian
CONVENTIONAL wisdom says that people in their twenties should save for
their pension as early as possible, but for the vast majority this is
unrealistic .
Under the age of 30, retirement is too far away to be a
motivating factor. Today’s 20-year-olds may not retire until they are
70. What will the world look like then? Does it now look like the world
of 1956? So which rational individual would tie up money for the next
50 years?
It’s also impractical because an increasing percentage of young people
have large debts. So advocating significant saving for retirement in 50
years’ time is not just pointless, it’s contrary to sensible financial
planning.
I’m
not saying they should spend, spend, spend. Every month, some pay
should be put aside for the future. People should put paying off
high-interest debt first, put away some ‘rainy day’ money in case of an
emergency, and then to try to get on the housing ladder.
Read more of this article.
Posted on November 28, 2006 by Jason
Chicago Tribune, November 26th, 2006
Once an expensive last resort for elderly homeowners struggling
for financial survival, reverse mortgages are now being sold as retirement
planning tools for affluent people.
Despite a softening housing market,
mortgage brokers say homeowners are using them to tap into their equity to
invest in stocks, upgrade their living quarters or simply pay expenses in lieu
of dipping into their retirement accounts too heavily.
Federally insured
reverse mortgages grew a stunning 77 percent in the fiscal year ended Sept. 30
compared with the year-earlier period, according to the National Reverse
Mortgage Lenders Association. That’s 76,351 home equity conversion mortgages,
which are available to homeowners 62 and older.
But this may be one of
those parties where it pays to arrive fashionably late. Industry growth and
soaring home values have spawned several new players–particularly in the
private jumbo-loan market–and as new products hit the market, the deals are
expected to get better, experts said.
Read more of this article.
Posted on November 20, 2006 by Jason
Orlando Sentinel, November 20th, 2006
Question: In your column, you indicated a seller who carries back the
mortgage for a buyer is creating an installment sale to spread out the
profit tax. A carryback mortgage is a true sale reportable to the IRS.
But an installment sale spreads out the income and the seller retains
the title. Am I wrong?
Answer: When a property seller carries back a promissory note secured
by a mortgage or deed of trust recorded against the title, that is an
installment sale entitling the seller to spread out the capital-gain
tax payments to the IRS over the years of receiving payments from the
buyer.
When the seller retains the title, and the buyer makes monthly payments
to the seller, that is usually called a contract for deed, installment
land sale, or other similar name. It is usually treated as an
installment sale.
However, an installment-sale seller can elect to pay all the capital
gain tax in the year of the property sale. The IRS will gladly accept
your tax payment.
Either way, the interest portion of each
payment received from the buyer by the seller is taxable as ordinary
income. For details, please consult your tax adviser.
Sibling rivalry looms?
Read more of this article.
Posted on November 17, 2006 by Jason
The Motley Fool, November 17th, 2006
Even people who love their jobs probably daydream a little bit about
retirement. After all, by the time you’re blowing out the candles on
your “Happy Retirement, Bob!” cake, you’ll probably have been working
for more than 40 years.
But for some people, “retirement” actually means more work. A survey of baby boomers conducted for Thrivent Financial for Lutherans
found that 43% planned to work full-time or part-time in retirement.
Some said they needed to work for money, but many were motivated by
social factors. Many seemed to be anticipating a change in jobs when
they said they wanted work that’s enjoyable and not too stressful.
The survey also gave some indication that boomers remain optimistic
about their retired lives, despite simultaneously reporting problems in
their preparations. On the one hand, a majority (56%) expect a standard
of living equal to or better than their parents.
On the other hand, almost three-quarters (71%) feel that a lack of
money will prevent them from accomplishing their retirement plans, and
a clear majority (59%) have not done any formal retirement planning,
either on their own or with professional help.
Maybe some of these boomers will find they have to work.
Read more of this article.
Posted on November 17, 2006 by Jason
Chicago Tribune, November 17th, 2006
Among economists and academics, a
consensus is growing that annuitization–exchanging a lump sum of money
for a lifetime income stream–can go a long way toward helping provide
retirement security for millions of Americans.
But if annuitization is good for us, why do so few of us do it?
This question has been dubbed the “annuity puzzle,” and a new study by
two college professors explores likely reasons, from cost to mistrust
of the insurance industry. The study also examines legislative
proposals to encourage annuitization by providing tax incentives for
buyers of so-called immediate annuities that pay an income for life.
Consumers have been cool to these annuities, which accounted for less
than $12 billion of the more than $212 billion in annuity sales last
year. Deferred annuities, in which earnings grow tax-deferred until
withdrawn, are more heavily marketed and rack up far more sales.
Deferred annuities offer the option to annuitize when you withdraw the
money, but only a small percentage of buyers do so.
Yet,
“economists have long been convinced that annuitization is the way to
go” to provide lifetime income security, said William Gentry, associate
professor of economics at Williams College and co-author of the study
with Casey Rothschild, an assistant professor at Middlebury College.
Read more of this article.
Posted on November 17, 2006 by Jason
Best Syndication, November 17th, 2006
As an older American you can turn to “reverse” mortgages to seek
money to pay off your current mortgage, finance a major home
improvement, supplement your retirement income, or to pay for those
unexpected health care expenses. These type loans can allow you to
convert part of the equity in your homes into cash – without having to
sell your homes, move out OR take on any additional monthly debt.
In a “regular” mortgage, you make monthly payments to the lender.
However, with a “reverse” mortgage, you, the homeowner, receive money
FROM the lender and, generally, you don’t have to pay it back for as
long as you live in your home. Instead, the loan is repaid when you
die, you sell your home or you no longer live in it as your principal
residence. Reverse mortgages are ideal for homeowners who have high
value in their homes but are lacking in available cash, or income! It
allows you to stay in your home and still meet your financial
obligations! In many cases, these type mortgages can increase the
quality of your live from the extra income you otherwise wouldn’t have
had!
Read more of this article.
Posted on November 16, 2006 by Jason
Marketwatch, November 16th, 2006
The sky is falling. Or at least that’s what the
so-called Merchants of Doom would have us believe. Yes, the merchants
– politicians, financial firms and the like — say the baby boomers’
retirement years will be more tarnished than golden.
Indeed, the merchants — many of whom are this week celebrating
National Retirement Planning Week by pelting the world with releases
telling Americans to save more and spend less — say the storm clouds
are darkening by the moment. Medicare will be in the red come 2018.
Social Security will only be able to pay out 74% of scheduled annual
benefits come 2040. And traditional pension plans are on the wane.
What’s worse, the merchants charge that aging Americans
are nothing more than a gray peril, greedy geezers who will ruin this
nation by pushing for policies that will fund what some have called
history’s greatest retirement party and will leave younger Americans to
pick up the tab.
In fact, so dark is the future that
the merchants are now proposing radical solutions that include cutting
or eliminating Social Security, rationing health care for older people,
lowering or terminating employer-sponsored pension benefits, making
people work longer so as to shorten the number of years spent in
retirement, making every one assume far greater individual
responsibility, and the accompanying individual risks, for retirement
financial planning and saving.
The authors of “Aging Nation — The
Economics and Politics of Growing Older in America” say all those
solutions are hogwash and over the top.
Read more of this article.
Posted on November 15, 2006 by Jason
The Journal News, November 15th, 2006
With about 75 million baby boomers rushing toward
retirement age, there is a push within the insurance industry to have
more of them consider buying long-term care insurance.
Such
policies are intended to cover expenses associated with care in old
age, including home health-care, and assisted-living or nursing-home
expenses.
The American Association for Long-Term Health Insurance
recently wrapped up a campaign to double the number of Americans who
hold long-term care policies to 14 million within five years.
The
marketing efforts included the release of results from a study
commissioned by the long-term care division at New York Life Insurance
Co., which has offices in Mount Pleasant.
Those findings showed the average cost for nursing-home care in the United States rose 6 percent in 2006.
Read more of this article.
Posted on November 15, 2006 by Jason
Marketwatch, November 14th, 2006
A new accounting rule issued by the Financial Accounting Standards
Board in late September will require companies to show the assets and
obligations of their pension plans on their balance sheets, which are a
standard part of every company’s quarterly report.
Currently, most companies only include assets and
estimated payout levels in the footnotes of their financial statements,
which usually just show up in annual reports.
The change shouldn’t have any impact on sales and profits, the most widely watched indicators of a company’s health.
But it is likely to draw attention to shortfalls or increased costs
spent on propping up these plans, which can fall into billion-dollar
deficits when stock returns falter or interest rates drop.
“To the extent that a company has an
underfunded pension plan, they’ll have a pension liability that
everyone will look at,” said Jonathan Nus, a director and accounting
specialist at Standard & Poor’s.
Read more of this article.
Posted on November 14, 2006 by Jason
Belleville News-Democrat, November 14th, 2006
One of my favorite sections in any newspaper is letters to the editor. And the best ones begin “So …”
Of that genre, the absolute prizewinner was a letter in my own newspaper that began, “So, speaking for all Americans….”
Find that exceptional hubris anyplace but on a newspaper opinion
page! Which, of course, is where columnists flourish. In the
swampwaters of opinion.
So, speaking for all aging boomers – and those of us affectionately
known as pre-boomers – I want to suggest that everyone embrace phased
retirement. That means, moving from working full time to working part
time to finally not working at all.
It’s a wonderful concept.
In phased retirement, you don’t have to say “goodbye.” You cut back but you don’t cut out.
Read more of this article.
