Archive for July, 2007

Study: Many Boomers Lack Retirement Fund

Posted on July 31, 2007 by Jason

Associated Press, July 30th, 2007

Nearly one-third of baby boomers ages 51 to 61 are at risk of not
having enough in savings to finance a comfortable retirement, according
to a study being released Tuesday by the Center for Retirement Research
at Boston College.

With its analysis, the center has joined the national debate over
how much savings is enough — and has done so on the side that says
there’s a shortfall.

“We just don’t believe people are saving too
much,” Alicia H. Munnell, a professor of management sciences at Boston
College and director of the retirement research center, told The
Associated Press.

A recently published academic study looked at
the retirement preparedness of Americans who were in their 50s in 1992
and concluded that at least 80 percent had more than enough assets for
retirement. Other scientists have argued that Americans may be saving
too much.

The new Boston College study evaluated the same 51-61
age group, but looked at their finances in 2004, and found 32 percent
to be “at risk” for not being able to maintain their preretirement
standing of living in retirement.

The difference between the
results, the center said, has to do with changes in the financial
environment. For one thing, Americans now must wait until they’re older
than 65 to collect full Social Security benefits; meanwhile, lower
interest rates mean they’ll probably collect less on annuities and
other investments. And many of today’s workers do not have pensions
like the earlier generation but must rely on worker-funded 401(k)
retirement accounts, the center said.

Read more of this article.

Millions skip meds, don’t take pills correctly

Posted on July 31, 2007 by Jason

MSNBC, July 30th, 2007

Consider it the other drug problem: Millions
of people don’t take their medicine correctly — or quit taking it
altogether — and the consequences can be deadly.

On average, half of patients with chronic illnesses like heart disease or asthma skip doses or otherwise mess up their medication, says a
report being issued later this week. It calls the problem a national
crisis costing billions of dollars.

The government is preparing new steps to try to persuade patients and their doctors to do better.

But with contributors that range from too-hurried doctor visits to confusing pill bottles, there’s no easy solution.

“We
go into this with some humility,” says Dr. Carolyn Clancy, director of
the Agency for Healthcare Research and Quality, which is planning what
she calls an “in your face” campaign to improve medication adherence.
“It’s really pretty appalling how badly we do.”

This
goes far beyond the issue of affording prescriptions. Often people buy
their drugs but misunderstand what they’re supposed to take, or how. Or
forget doses. Or start feeling better and toss the rest of the bottle.
Or skip doses for fear of side effects.

Read more of this article.

Who’s cashing in your chips?

Posted on July 30, 2007 by Jason

The New York Daily News,  July 30th, 2007

Someone out there wants to place a bet on when you’re going to die -
and they’re willing to hand you a chunk of cash now, while you’re still
alive.

This fast-growing business allows seniors to raise quick cash by selling their life insurance policies.

Years ago, seniors who didn’t need life insurance anymore or could
no longer afford the premiums didn’t have many options. They could
either let the policy lapse or collect the cash value, often a meager
sum.

Now, a growing number of people older than 65 are entering into
deals called life settlements where they sell off their life insurance
to a third party for more than its cash value, but less than the death
benefit.

“It’s an asset that seniors never realized they had,” said Doug
Head, executive director of the Life Insurance Settlement Association.

There is a creepy catch: The sooner you die, the better it is for
whomever bought your policy. That’s because the new holder can stop
paying premiums and collect the death benefit.

Read more of this article.

Healthcare war hits America’s retirees hard

Posted on July 27, 2007 by Jason

Brentwood Press, July 28th, 2007

American retirees, some 20 million of
them, are among the largest group of casualties in the war being waged
by their former corporate employers against workers’ and retirees’
earned healthcare benefits.

This
tug of war over the future of retiree health benefits is by no means a
mere skirmish. It affects up to 40 percent of Americans ages 60 and
over, and tens of billions of dollars in health costs each year.

Major
American corporations claim that they can no longer afford to stay
competitive and sell their products and services in a global economy
while paying benefits to retirees, even if these were contractual
commitments made to retirees in their working years.

Airlines
say they can’t pay jet fuel costs and retirees’ health benefits and
survive, and American auto manufacturers say that hundreds, if not
thousands of dollars of the cost of each domestically made vehicle goes
to paying worker and retiree health benefits.

Read more of this article.

Many travel discounts still exist for senior citizens

Posted on July 25, 2007 by Jason

Los Angeles Times, July 26th, 2007

The sun has set on fare discounts for hundreds of thousands of senior fliers. Blame airline cutbacks.

But travelers 62 and older, and sometimes as young as 50, can still
land special deals for hotel rooms, rental cars, meals and even a few
plane seats.

Here’s a quick survey of where the senior savings are — or aren’t — and tips to ensure that you get a deal:

Airlines: Once common, discounted airfares for seniors are getting scarce.

United Airlines, www.united.com,
on July 1 stopped accepting new members for its Silver Wings program,
which offers double mileage, flight vouchers and special zoned fares
for customers 55 and older. (Some current members can still access
certain benefits.) In a statement on the program’s website, www.silverwingsplus.com, United said it took the action to “control costs, optimize revenue and respond to customer feedback.”

Among the savings for the airline is the cost of paying vendors to operate the program, spokesman Jeff Kovick said.

Fewer than 1% of the nearly 50 million frequent fliers in United’s
Mileage Plus program belong to Silver Wings, Kovick said, although he
declined to provide an exact number or to say whether membership had
been increasing or falling.

Read more of this article.

Iowa Probes Long-Term Care Insurance

Posted on July 19, 2007 by Jason

Consumer Affairs, July 18th, 2007

Iowa Attorney General Tom Miller is launching a probe into long-term
care insurance, following complaints from seniors who say they’re not
receiving the benefits they were told their policies would deliver.

Miller launched the probe after the state’s chief insurance
regulator said he had insufficient authority to handle the
investigation.

The attorney general’s office can use the state’s tough Consumer Fraud Act to subpoena witnesses and prosecute offenders.

Miller has long taken an aggressive stance towards fraud aimed at
seniors. The state ranks second in the nation in the percentage of
residents age 85 and over and is often seen as a primary target of
elder scams.

Besides denied claims, elderly consumers say their long-term-care premiums have risen faster than they anticipated.

A recent New York Times series documented problems and
abuses nationwide, sparking a Congressional investigaiton into two of
the leading LTC issuers, Conseco and Penn Treaty.

Read more of this article.

Life Insurance on the Line

Posted on July 18, 2007 by Jason

Marketplace, July 17th, 2007

Lisa Napoli: A few weeks ago, a pair
of Irish hedge funds filed for bankruptcy after some risky investments
went south. Ritchie Capital had invested in what are called “life
settlement policies.” That’s basically where investors buy life
insurance policies and profit when the original policyholders die. As
Marketplace’s Amy Scott reports, it’s not the only way investors are
cashing in on matters of life and death.

Amy Scott: You’ve probably seen the ads on cable:

Life Insurance Ad: If you’re a senior like me, you may be surprised at how much you can be paid for your life insurance.

If you’re over 65 and short on cash, you can sell your life
insurance policy to a company like J.G. Wentworth. So-called life
settlement companies pool your policy with others and sell it on to
investors in the form of a bond.

Nick Potter is an attorney with the law firm Debevoise and Plimpton.
He says unlike viatical settlement companies that target the terminally
ill, life settlement companies focus on healthy seniors.

Nick Potter: Someone who
feels that, well I could use the money now, and I might as well sell
the policy and have someone else wager on the duration of my life.

Ghoulish? Certainly. Shady? Perhaps. Life settlement firm Coventry
First is under investigation. State officials say the company may have
underpaid people who sold their policies. Those bankrupt Ritchie
Capital hedge funds invested in Coventry’s life settlements.

Read more of this article.   Learn more about Life Settlements.

Paths to Relief for Boomers in Debt

Posted on July 16, 2007 by Jason

The Washington Post, July 14th, 2007

How are baby boomers who are still carrying hefty first and second mortgages
going to pay them off?

Millions of homeowners refinanced during the “refi boom” of 2003 and 2004 and
took out new loans with 15- or 30-year terms. Many in their late 50s and early
60s now have big mortgages with terms running for another quarter-century.

When monthly payments on those mortgages begin to weigh heavily, will boomers
need to sell their houses to relieve the debt pressure? The largest banks and
mortgage companies in the country are readying creative financial products to
make the answer to that question a resounding no.

Tops on the list: proprietary reverse mortgages that let owners pay off their
existing loans, pull out additional equity for other expenses, establish credit
lines or even buy second homes — all without producing monthly payment
obligations.

In a pilot program in Arizona for its “senior equity maximizer” jumbo reverse mortgage, Bank of America found that the primary use for funds was to retire
first mortgages, according to Colin McCormick, the bank’s reverse-mortgage
executive.

That program allows reverse mortgages to go as high as $10 million, depending
on available equity in the home, the borrowers’ ages and current interest rates.
McCormick said the program will be rolled out nationwide later this year,
probably beginning in California and Florida.

Read more of this article.

Emptying Nest Eggs, Not the Nests

Posted on July 16, 2007 by Jason

The New York Times, July 14th, 2007

Their son, Michael, 23, just moved back home and is looking for a job. Their
daughter, Alison, 20, will start graduate school at Columbia University next month, and they are paying her rent.

In contrast to previous generations, when young people generally took control
of their finances — and their lives — after graduating from college, more
parents are supporting their offspring well into adulthood.

In part, it is a matter of economic necessity. College graduates face
enormous loan debt. Their entry-level salaries do not come close to covering
high housing costs in many parts of the country. And their parents, fearing the
worst, agree to pitch in. Then there is the emotional attachment.

“It’s a gift we can give them now,” said Mrs. Riccardi of Hillsdale, N.J. “If
we can bite the bullet now, it will help them later.”

This gift is not a couple of $20 bills tucked into a holiday or birthday
card. It is more like an allowance that extends past adolescence, often into the
30s. It pays for housing, bills and other expenses. In fact, research shows that
financial strings to the parents’ wallets are never really severed.

Read more of this article.

Increasing Rate of Foreclosures Upsets Atlanta

Posted on July 10, 2007 by Jason

The New York Times,  July 9th, 2007

Despite a vibrant local economy, Atlanta homeowners are falling behind on
mortgage payments and losing their homes at one of the highest rates in the
nation, offering a troubling glimpse of what experts fear may be in store for
other parts of the country.

The real estate slump here and elsewhere is likely to worsen, given that most
of the adjustable rate mortgages written in the last three years will be reset
with higher interest rates, said Christopher F. Thornberg, an economist with
Beacon Economics in Los Angeles. As a result, borrowers of an estimated $800
billion in loans will be forced in the next 12 months to 18 months to make
bigger monthly payments, refinance or sell their homes.

A big reason the fallout is occurring faster here is a Georgia law that
permits lenders to foreclose on properties more quickly than in other states.
The problems include not just people losing their homes, but also sharp declines
in property values, particularly in lower-income and working-class
neighborhoods.

For example, a three-bedroom house near Turner Field, where the Atlanta
Braves baseball team plays, fetched a high bid late last month of $134,000 at an
auction by the bank that took possession of it. Almost three years ago, the new
home was bought for $330,000.

While the surge in foreclosures in other big cities like Cleveland, New
Orleans and Detroit can be attributed to local economic challenges, Atlanta more
closely reflects the nation. Its unemployment rate, 4.9 percent in May, is low
and close to the national average of 4.5 percent. And businesses here are adding
jobs, albeit at a slower pace than they were last year.

Read more of this article.

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