Posted on January 23, 2007 by Jason
San Diego Union-Tribune, January 18th, 2006
A lot of people envision retirement as an abrupt change from work to
play, but a new study by The Vanguard Group has found that it’s more
likely to take the form of a gradual transition from a full-time job to
full-time leisure.
A study released Thursday by the Valley Forge, Pa., mutual funds
company found that about six in 10 Americans say that their retirement
plans include part-time or full-time work.
The survey of some 2,500 adults age 40 to 69 also found that “a common
strategy for making the transition from work to retirement is
downshifting.” That is, older workers shift to less stressful or
simpler jobs before stopping work entirely.
Nearly 25 percent of respondents age 55 and older have
“downshifted” at least once, the study found, and 40 percent expect to
do so in the future.
Steve Utkus, director of the Vanguard Center for Retirement
Research, which commissioned the study, said it has important
implications for employers and workers alike.
Read more of this article.
Posted on January 23, 2007 by Jason
Napa Valley Register, January 22nd, 2006
When you determine your retirement
income needs, you make your projections based on the type of lifestyle
you plan to have and the desired timing of your retirement.
However,
you may find that reality is not in sync with your projections and it
looks like your retirement income will be insufficient for the rate you
plan to spend it.
This is called a projected income shortfall.
If you find yourself in such a situation, finding the best solution
will depend on several factors, including the following:
• The severity of your projected shortfall
• The length of time remaining before retirement
• How long you need your retirement income to last
Several methods of coping with projected income shortfalls are described in the following sections.
One way of dealing with a projected income shortfall is to stay in the workforce longer than you had planned.
Read more of this article.
Posted on January 23, 2007 by Jason
US News and World Report, January 22nd, 2006
The problems with Social Security are not going away. That was the message Federal Reserve Chairman Ben Bernanke delivered
in his testimony this week to the Senate Budget Committee. He points to
a possible quadrupling of the federal budget deficit by 2030–which
sounds like a long time from now but is only 23 years away.
Long-range projections prepared by the CBO vividly portray the
potential effects on the budget of an aging population and rapidly
rising healthcare costs. The CBO has developed projections for a
variety of alternative scenarios, based on different assumptions about
the evolution of spending and taxes. The scenarios produce a wide range
of possible budget outcomes, reflecting the substantial uncertainty
that attends long-range budget projections. However, the outcomes that
appear most likely, in the absence of policy changes, involve rising
budget deficits and increases in the amount of federal debt outstanding
to unprecedented levels. For example, one plausible scenario is based
on the assumptions that (1) federal retirement and health spending will
follow the CBO’s intermediate projection; (2) defense spending will
drift down over time as a percentage of GDP; (3) other noninterest
spending will grow roughly in line with GDP; and (4) federal revenues
will remain close to their historical share of GDP–that is, about where
they are today. Under these assumptions, the CBO calculates that, by
2030, the federal budget deficit will approach 9 percent of GDP–more
than four times greater as a share of GDP than the deficit in fiscal
year 2006.
Here is his sobering conclusion:
To summarize, because of demographic changes and rising medical
costs, federal expenditures for entitlement programs are projected to
rise sharply over the next few decades. Dealing with the resulting
fiscal strains will pose difficult choices for the Congress, the
administration, and the American people. However, if early and
meaningful action is not taken, the U.S. economy could be seriously
weakened, with future generations bearing much of the cost. The
decisions the Congress will face will not be easy or simple, but the
benefits of placing the budget on a path that is both sustainable and
meets the nation’s long-run needs would be substantial.
Read more of this article.
Posted on January 23, 2007 by Jason
MSNBC, January 22nd, 2006
Hank Paulson’s attempt to persuade Democratic
members of Congress to agree to launch a bipartisan initiative to
reform Social Security is fast approaching crunch time.
People
close to the highly sensitive discussions say the Treasury secretary
will know in three to four weeks whether enough prominent Democrats are
willing to join such an effort to give it a plausible chance of success.
At this stage the exploratory talks are focused on process rather than the substance of any reform plan.
Treasury
officials are encouraged by feedback in a second round of telephone
calls between Mr Paulson and prominent Democrats, which followed an
earlier set of calls in the immediate aftermath of the November
mid-term elections.
“He
has had some productive conversations with members on both sides of the
aisle,” a Treasury official said. “It remains to be seen whether we can
reach critical mass.” The official refused to name names, for fear this
would jeopardise the discussions.
Read more of this article.
Posted on January 22, 2007 by Jason
Detroit Free Press, January 21st, 2006
Dear Bob: For the last six years, I have lived in my mother’s house to take care of her, as she is very senile.
I have been making the mortgage payments and paying the property taxes.
However, when I had my income taxes prepared last year, I was told I am
not entitled to these deductions because my name is not on the title
and my mother’s name and Social Security number are on the mortgage.
Is this true? – Michele M.
Dear Michele: Yes. The reason you are not entitled to claim
those itemized deductions on your personal income tax return is you
have no legal obligation to make those payments. You may have a moral
obligation to help your mother, but that doesn’t count with the IRS.
However, this problem is easily solved. If your mother is capable of
signing a quitclaim deed, she can add your name to her title, perhaps
by holding title in joint tenancy with right of survivorship. Her name
would remain on the title but you would be legally obligated for those
payments you have been making and can claim them as itemized deductions
on your personal income tax returns.
Read more of this article.
Posted on January 21, 2007 by Jason
New Orleans Times-Picayune, January 20th, 2006
With another congressman sentenced to prison
Friday, the House appears poised to pass legislation that
would strip lawmaker-felons of their congressional pensions.
The Senate already passed a bill dubbed “The Duke
Cunningham Act” after the bribe-taking California
politician, and the House plans to take up a similar bill
Monday.
But neither of the bills would touch the pensions of
Cunningham or former Rep. Bob Ney, R-Ohio, who was sentenced
Friday to 30 months in prison for conspiracy.
Cunningham and Ney may be the most recent poster children
for congressional misdeeds, but because neither bill would
punish past behavior, they will likely live out their days
on the taxpayers’ dime.
Lawmakers pushing the bills say they would have preferred
the law take effect immediately, but say the Constitution
prevents it. Article 1 forbids passing laws retroactively,
and the 27th Amendment prohibits instituting changes in
congressional pay until after an election is held — a
check on members giving themselves raises.
“Ideally, it would take effect right away, but we
didn’t want it challenged in court,” said Vince
Morris, spokesman for Sen. John Kerry, D-Mass., who authored
the Senate-passed pension ban that would take effect in
2009.
Read more of this article.
Posted on January 19, 2007 by Jason
The Motley Fool, January 18th, 2006
If you sometimes feel your rational brain and your irrational brain
fighting with each other inside your head, you’re probably not alone.
In fact, there’s an entire branch of economics, known as behavioral
economics, devoted to studying why and how we humans make decisions
that may not be the best for us.
Recently, the Employee Benefits Research Institute looked at the
contributions that behavioralists have made toward understanding why we
don’t always make the best decisions when it comes to our 401(k)
retirement plans.
You’ve already learned, in the first part of this article,
that human nature tends to flow with the status quo. If you’ve stuck
with the default options in your 401(k) because you were automatically
enrolled in the savings plan, it’s time to take a look at your
contributions and investments.
If you’ve been an active 401(k) investor, you’re not out of hot
water yet. You have your own set of behavioral quirks to contend with.
See if any of these tendencies have caused you to make some
less-than-optimal decisions about your 401(k) account.
Read more of this article.
Posted on January 19, 2007 by Jason
The Motley Fool, January 19th, 2006
Many economists study the rational man, the
person we would all be if we saved exactly enough money for retirement,
tracked every penny of spending, ate our leafy green vegetables, and
flossed every day.
Other
economists, known as behavioralists, study the rest of us. In other
words, they try to figure out why humans make the decisions they do,
even when they may not always be in our best interests.
The Employee Benefit Research Institute
recently looked at the contributions that behavioral economists have
made toward understanding workers and their retirement savings. Their
findings offer some caveats for virtually everyone with a 401(k).
Keep
reading this if you’ve been automatically signed up for your company’s
401(k) savings plan, particularly if the plan makes all the tough
decisions for you. Skip ahead to the second part of this tale if you’re
making active decisions about how much money to save and how to invest.
Read more of this article.
Posted on January 18, 2007 by Jason
KSBI-TV, January 18th, 2006
As America’s oldest
baby boomers start counting down to retirement, a new government survey
shows they are on the upswing in terms of financial savvy — nearly
twice as likely as today’s seniors to bank and pay bills online.
Yet
despite their financial sophistication, one in four boomers still gets
paid with old-fashioned paper checks, a trend that’s particularly
entrenched with those closest to retirement age, 51-60 years old.
The
national survey, sponsored by the U.S. Department of the Treasury and
Federal Reserve Banks on behalf of the Go Direct campaign, coincides
with a yearlong “Countdown to Retirement” pledge drive to encourage
baby boomers preparing to head into retirement to choose direct deposit
once they start collecting Social Security benefits.
“Direct
deposit is a long-standing priority for Treasury, because it’s safer
and easier for consumers than paper checks,” said Treasury Fiscal
Assistant Secretary Donald Hammond. “With the anticipated surge in baby
boomer retirements in the coming years, we must encourage Social
Security recipients to sign up for direct deposit. There are
significant benefits, in terms of safety and security, for the
recipients and considerable cost savings for American taxpayers.”
Read more of this article.
Posted on January 16, 2007 by Jason
Reuters, January 16th, 2006
The U.S. House of Representatives voted Tuesday to waive a cap on
the number of reverse mortgages that a federal housing agency may
insure for older Americans who want to turn their home equity into cash.
The
Federal Housing Administration, which insures many such mortgages, is
in danger of hitting the 275,000 ceiling on the number of such loans
that it can handle.
Tuesday’s legislation, if passed by the U.S.
Senate, would remove the limit and allow the federal agency to continue
to underwrite such loans.
Under a reverse annuity mortgage, a
lender buys back a senior citizen’s home with regular payments before
actually acquiring the property. The mortgage is a popular tool for the
elderly to use their home equity late in life.
Rep. Jim Matheson, Democrat of Utah, sponsored the bill.
Read more of this article. Learn more about Reverse Mortgages.
