Archive for March, 2008

Golden Years Longer And Wealthier

Posted on March 31, 2008 by Jason

CBSNews, March 31, 2008

Older Americans are living longer, and with more money, than previous
generations, according to a new government report on aging.

The report, Older Americans 2008: Key Indicators of Well-Being, comes from the Federal Interagency Forum on Aging-Related Statistics.

It predicts that there will be 71.5 million people aged 65 and
older in the U.S. in 2030 – twice as many as in 2000 – because of the
aging baby boomers and greater life expectancy.

“Americans are living longer than ever before. Life expectancies at
both age 65 and age 85 have increased,” states the report. “Under
current mortality conditions, people who survive to age 65 can expect
to live an average of 18.7 years, almost seven years longer than people
age 65 in 1900. The life expectancy of people who survive to age 85
today is 7.2 years for women and 6.1 years for men.”

The report also shows a drop in the number of older Americans
living in poverty, and a rise in older Americans with high incomes.
More Americans aged 55 and older – especially women – are working,
compared to previous generations.

“On average, net worth has increased almost 80 percent for older
Americans over the past 20 years,” the report states. But large gaps in
income still exist between whites and African-Americans, and between
people with high or low levels of education.

Healthy-Aging Diet

Older Americans, like many younger Americans, could use a diet
upgrade. In particular, the report recommends that older Americans eat
more of these foods:

  • Whole grains

  • Fruits and vegetables (especially dark green and orange vegetables)
  • Fat-free or low-fat dairy products

    The CDC wants older Americans to make two other dietary changes:

  • Cut back on salt, saturated fat, and calories from foods and beverages with solid fats, added sugar, and alcohol.
  • Use oils (including those in fish, nuts, and seeds) to replace some solid fats.

    The report also notes that obesity has become more common among
    older adults and other age groups in recent decades. Here are the
    percentages of older adults not living in institutions who were obese
    in 2005 2006:

  • Women aged 65-74: 37 percent (up from 27 percent in 1988-1994)
  • Women aged 75 and older: 24 percent (up from 19 percent in 1988-1994)
  • Men aged 65-74: 33 percent (up from 24 percent in 1988-1994)
  • Men aged 75 and older: 25 percent (up from 13 percent in 1988-1994)


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    Women will drive boomer retirement

    Posted on March 31, 2008 by Jason

    InvestmentNews, March 31, 2008

    By now you are probably tired of hearing that baby boomers are going to
    change retirement. The fact is, they are. Yet despite all the talk, the
    financial services industry still remains mostly unprepared — largely
    because they don’t see how major societal shifts are changing the very
    practical financial needs of boomers.

    Let’s examine one area where this is particularly the case: the big changes that are taking place among women.

    First, some background.

    Boomers
    are the first generation in which a majority of women have been (or
    are) in the work force. In boomer households, 63% of women work.

    This will affect retirement in several crucial ways:

    A greater voice. Many
    boomer women have earned their own money and will decide how it is
    spent, saved and invested. Unlike in earlier times, women take part in
    a family’s financial decision making, and are often the sole decision
    maker.

    Even if they don’t work at all or don’t earn as much as
    men, today’s women are more likely than those of earlier generations to
    be involved with every aspect of the household’s financial decisions,
    including retirement.

    Woe, then, to the financial adviser who doesn’t include the woman in the household’s financial planning process.

    A different retirement.
    In the past, when the household head was typically the sole source of
    income, the household “retired” when the wage earner retired. With
    three-quarters of boomer households having two wage earners in 2006,
    many boomer households won’t be “retired” until both earners retire.

    Instead
    of being clearly classified as retired or not retired, boomer
    households are likely to spend many years in a more vague and unsettled
    life stage that may be called semi-retirement, revolving retirement,
    working retirement, non-retirement, re-retirement or some other name
    that reflects a midway stage between full-time work and traditional
    retirement.

    And while there is no universal term to describe
    that in-between life stage yet, there is a word describing two-earner
    households where one person retires without considering the other —
    divorced.

    In households with working male and female heads, the
    woman is typically younger than her husband, lives longer and is more
    likely to have gaps in her employment history. As a result, women are
    likely to remain in the work force after her male partner has retired.

    Because of their greater longevity, female household heads typically face more years in retirement than males.

    And
    since widows are far more common than widowers, the female household
    head will require more money to maintain her married living standard
    than if she went into retirement after being single.

    Gaps in
    women’s employment may mean that a woman will stay in the work force
    longer than her male counterpart in order to reach the career level for
    which she was striving.

    All this suggests that boomer women
    will want to work for a longer period and will need more money to
    maintain their lifestyle for a longer time.

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    Declining Home Values – What Effect Will It Have On Reverse Mortgages?

    Posted on March 28, 2008 by Jason

    HULIQ, March 28th, 2008

    Falling home prices are putting pressure on homeowners across the
    country. What do the declining home values mean to your Revere Mortgage or your chances of getting one.

    Many homeowners have seen their equity drop in the last year and
    it’s likely that this trend will continue in the near future. The
    question you may be asking yourself, and the question we are being
    asked quite often lately, is what effect the decline in the housing
    market will have on Reverse Mortgages.
    This question really actually breaks down into two seperate questions
    and they are both very important to those concerned. The first question
    here is what effect the declining home values will have on those trying
    to get a reverse mortgage, and the second question is what the effect
    will be on those who already have a reverse mortgage. Lets look at both
    these questions to see what this housing debacle might mean to you.

    First things first, for those who already has a Reverse Mortgage,
    you have nothing to worry about. Many homeowners have been contacting
    us asking about what will happen if their home values drop to much and
    the reverse mortgage they have becomes more than the homes value. One
    of the best parts of a reverse mortgage is that once you take one out
    the terms of the loan cannot change. If you have a line of credit or
    are receiving monthly payments you will continue to receive them
    according to the terms of your loan. If the value of your home drops
    below the amount due on your loan the lender cannot come ask for more
    money or file any deficiency judgement in the event they lose money.
    Reverse Mortgages have been designed to provide you security for these very circumstances.

    For those who are contemplating taking out a Reverse Mortgage the
    declining home values could pose some problems. If you in an area that
    has been hit pretty hard by the real estate downturn then there is a
    chance the amount of equity in your home will no longer qualify you for
    a reverse mortgage. With this being said, some of the hardest hit areas
    are places where the average home value is more than the maximum HUD
    limits anwyays so it might not actually change anything for you. If you
    are concerned about what your county limits are or if the downturn in
    the market has changed if you qualify for a Reverse Mortgage you can
    always get a free loan analysis.

    Read more of this article

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    Most Older Americans Living Longer and Better

    Posted on March 27, 2008 by Jason

    US News & World Report, March 27th, 2008

    Older Americans are living longer than ever and enjoying better health and financial security, a new report finds.

    Yet there continue to be lingering disparities between racial and ethnic groups.

    In 2006, there were an estimated 37 million Americans 65 and older
    – 2 percent of the population. By 2030, it’s estimated at 71.5 million
    people will be 65 and older — almost 20 percent of the population,
    according to the report, Older Americans 2008: Key Indicators of Well-Being.

    “This report comes at a critical time,” Edward Sondik, director of
    the National Center for Health Statistics, said Thursday in a prepared
    statement. “As the baby boomers age and America’s older population
    grows larger and more diverse, community leaders, policymakers and
    researchers have an even greater need for reliable data to understand
    where older Americans stand today and what they may face tomorrow.”

    The report examined five broad areas of well-being: economics, health status, health risks and behaviors and health care.

    Even though life expectancy for Americans continues to increase for
    those 65 years of age, it is lower than in countries such as Canada,
    France Japan and Sweden. For example, Japanese women 65 years of age
    live 3.2 years longer than women in the United States. Among men, the
    difference is 1.2 years, according to the report.

    Read more of this article

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    U.S. Retirement Assets Grew Substantially in Last 10 Years, But Face a Challenging 2008

    Posted on March 27, 2008 by Jason

    CNNMoney, March 27th, 2008

    Although recent market downturns are holding back asset growth, U.S.
    retirement plans have nearly doubled in value since 1997, research by
    Watson Wyatt Worldwide, a leading global consulting firm, has found.

    The 2008 Global Pensions Asset Study found that assets in U.S.
    pension funds, 401(k)s, individual retirement accounts and other
    retirement savings vehicles have increased from $7.9 trillion in 1997
    to $15 trillion in 2007. As of the start of the year, these U.S.
    retirement assets were worth more than the gross domestic product ($14
    trillion) based on a compound annual growth rate of 6.7 percent since
    1997 compared with GDP growth of 4.8 percent during the same period.

    “Retirement plans have built up strong reserves over the last 10
    years, benefiting employers, employees and retirees,” said Carl Hess,
    director of Watson Wyatt’s investment consulting in North America.
    “Companies that have taken steps to optimize returns or reduce risk
    through their investment strategies, whether by hedging,
    diversification or better deals on fees, are better positioned than
    those still thinking about it. The current market will be challenging
    for many investors, and we can expect to see declines in asset values
    over the next year if the market turmoil continues.”

    Growth rates for retirement assets began slowing worldwide in 2007.
    In the 11 countries with the largest workplace retirement systems, the
    estimated growth rate for retirement assets was only 2 percent in 2007.
    This was a significant drop from the 10.5 percent growth rate for the
    five-year period ending in 2007 and from the 7.4 percent per annum
    growth of the last 10 years. U.S. short-term returns were better with
    retirement assets growing 8.3 percent in 2007 and 10.9 percent over
    five years. U.S. retirement assets make up an estimated 60 percent of
    assets in the 11 countries, although the U.S. share has been declining
    slowly.

    In the United States, most retirement plan assets (59 percent) are
    invested in equities, while less than a quarter (23 percent) are in
    bonds and 17 percent in alternative assets, which include hedge funds,
    private equity, real estate, commodities and infrastructure. While the
    amount in equities has remained relatively stable over the last 10
    years, the portion in alternatives has grown (from 9 percent in 1997)
    and the share in bonds has declined (from 33 percent in 1997).

    Read more of this article

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    Government benefit programs in trouble

    Posted on March 25, 2008 by Jason

    Yahoo News, March 25h, 2008

    Trustees for the government’s two biggest benefit programs warned Tuesday that Social Security and Medicare are facing “enormous challenges,” with the threat to Medicare’s solvency far more severe.

    The trustees, issuing a once-a-year analysis of the government’s two biggest benefit programs, said the resources in the Social Security trust fund will be depleted by 2041. The reserves in the Medicare trust fund that pays hospital benefits were projected to be wiped out by 2019.

    Both those dates were the same as in last year’s report. But the
    trustees warned that financial pressures will begin much sooner when
    the programs begin paying out more in benefits each year than they
    collect in payroll taxes. For Medicare, that threshhold is projected to
    be reached this year and for Social Security it is projected to occur in 2017.

    The first year that payments will exceed income for Social Security
    will occur in 2017, just nine years from now, reflecting growing
    demands from the retirement of 78 million baby boomers. Medicare is
    projected to pay out more than it receives in income starting this year.

    “The financial difficulties facing Social Security and Medicare pose
    enormous challenges,” the trustees said in their report. “The sooner
    these challenges are addressed, the more varied and less disruptive
    their solutions can be.”

    Treasury Secretary Henry Paulson, one of the trustees, warned that the country was facing a fiscal train wreck unless something is done.

    “Without change, rising costs will drive government spending to
    unprecedented levels, consume nearly all projected federal revenues and
    threaten America’s future prosperity,” Paulson said in releasing the
    new report. “Our nation needs a bipartisan effort to strengthen both
    programs for future retirees.”

    President Bush,
    who wanted to make overhauling Social Security his top domestic
    priority in his second term, tapped Paulson to lead that effort.
    However, Paulson has been unable to forge a consensus with Democrats,
    who took control of Congress in 2006.

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    Reverse Mortgage Counseling Industry Leaders Announce Launch of National Housing Counseling Association

    Posted on March 24, 2008 by Jason

    BusinessWire, March 24th, 2008

    A coalition of reverse mortgage counseling agencies and elder care
    experts announced today a collaboration to launch the National Housing
    Counseling Association (NHCA).

    NHCA will act as an independent organization to support HUD-approved
    501(c)(3) housing counseling agencies in the delivery of reverse
    mortgage counseling services. Its principle goal is to support education
    initiatives and provide resources to improve the operational efficiency,
    consistency and financial sustainability of reverse mortgage counseling
    programs nationwide.

    The association will build on existing best practices in the reverse
    mortgage counseling industry and will offer membership to all
    HUD-approved housing counseling agencies that provide reverse mortgage
    counseling and are prepared to meet HUD Home Equity Conversion Mortgage
    (HECM) counseling network standards and abide by the NHCA code of ethics.

    “The association was created to ensure the
    availability and quality of reverse mortgage counseling for seniors,“
    said Chuck Stanley, NHCA spokesperson. “With
    the near exhaustion of available HUD funds for HECM counseling, and the
    delay in HUD’s borrower pay regulation, many counseling agencies are
    being forced to cut back on counseling services. NHCA has developed an
    industry-wide approach to accessing additional grant funds without the
    perceived conflict of interest associated with direct contributions by
    individual reverse mortgage lenders. We believe this approach will be a
    win-win for all reverse mortgage counseling agencies, their clients and
    the reverse mortgage industry as a whole.“

    Participating agencies will have the benefit of accessing
    industry-leading “DirectConnect Reverse Mortgage Counseling Services™“
    software, which will be used to gather counseling session data for use
    in grant reimbursement and research purposes.

    Jay Greenberg, executive vice president of the National Council on Aging
    (NCOA), added, “We are excited to assist the
    NHCA in increasing financial transparency and maximizing the value of
    the counseling and education experience for seniors.“

    NHCA is currently endorsed by many HUD-approved counseling agencies, and
    agencies from each of the credit counseling trade organizations,
    American Association of Debt Management Organizations, Association of
    Independent Consumer Credit Counseling Agencies, and the National
    Foundation for Credit Counseling. These participating agencies are
    responsible for providing more than 80 percent of reverse mortgage
    counseling sessions done today: By Design Financial Solutions, Consumer
    Credit Counseling Service of Forsyth County, Consumer Credit Counseling
    Service of San Francisco, National Foundation for Debt Management,
    Lutheran Social Services of Duluth, Springboard and Money Management
    International (and its 120 CCCS branch offices throughout the country).

    About National Housing Counseling
    Association

    NHCA pledges help and support the delivery of high quality counseling to
    seniors, ensure the delivery of consistent, reliable counseling services
    meeting the business needs of lenders, and develop a sustainable source
    of revenue for counseling agencies to offset the cost of providing this
    much needed service. To learn more, or join the association, contact
    NHCA at info@nhcounselingassociation.org.

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    Gap in Life Expectancy Widens for the Nation

    Posted on March 23, 2008 by Jason

    The New York Times, March 23rd, 2008

    New government research has found “large and growing” disparities in
    life expectancy for richer and poorer Americans, paralleling the growth
    of income inequality in the last two decades.

    Life expectancy for the nation as a whole has increased, the
    researchers said, but affluent people have experienced greater gains,
    and this, in turn, has caused a widening gap.

    One of the researchers, Gopal K. Singh, a demographer at the Department of Health and Human Services,
    said “the growing inequalities in life expectancy” mirrored trends in
    infant mortality and in death from heart disease and certain cancers.

    The gaps have been increasing despite efforts by the federal
    government to reduce them. One of the top goals of “Healthy People
    2010,” an official statement of national health objectives issued in
    2000, is to “eliminate health disparities among different segments of
    the population,” including higher- and lower-income groups and people
    of different racial and ethnic background.

    Dr. Singh said last week that federal officials had found “widening
    socioeconomic inequalities in life expectancy” at birth and at every
    age level.

    He and another researcher, Mohammad Siahpush, a professor at the University of Nebraska
    Medical Center in Omaha, developed an index to measure social and
    economic conditions in every county, using census data on education,
    income, poverty, housing and other factors. Counties were then
    classified into 10 groups of equal population size.

    In 1980-82, Dr. Singh said, people in the most affluent group could
    expect to live 2.8 years longer than people in the most deprived group
    (75.8 versus 73 years). By 1998-2000, the difference in life expectancy
    had increased to 4.5 years (79.2 versus 74.7 years), and it continues
    to grow, he said.

    After 20 years, the lowest socioeconomic group lagged further behind
    the most affluent, Dr. Singh said, noting that “life expectancy was
    higher for the most affluent in 1980 than for the most deprived group
    in 2000.”

    “If you look at the extremes in 2000,” Dr. Singh said, “men in the
    most deprived counties had 10 years’ shorter life expectancy than women
    in the most affluent counties (71.5 years versus 81.3 years).” The
    difference between poor black men and affluent white women was more
    than 14 years (66.9 years vs. 81.1 years).

    Read more of this article

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    Generation Mortgage Adopts Policy to Safeguard Seniors From Buying Unsuitable Financial Products with Reverse Mortgage Proceeds

    Posted on March 21, 2008 by Jason

    Trading Markets, March 21, 2008

    Generation Mortgage Company(TM), an
    Atlanta-based company specializing solely in providing reverse
    mortgages to qualified seniors, today announced a set of policies and
    procedures which apply to purchases of other financial products using reverse mortgage proceeds. There is a clear distinction between suitable and unsuitable products for seniors.

    Under
    the policies and procedures announced today, products that are designed
    for long-term wealth accumulation for younger adults, and which impose
    surrender or withdrawal charges, are considered unsuitable for reverse
    mortgage borrowers, and seniors in general. Examples of such products
    include both fixed and variable deferred annuities with surrender
    charges and long- term bank certificates of deposit with early
    withdrawal penalties.

    Products
    which remain potentially suitable under Generation’s policies are those
    which address the needs and risks seniors face, such as provisions for
    lifetime income and long-term care needs. Immediate annuities and
    long-term care insurance, properly designed and purchased, address
    these needs and risks and remain suitable choices for some seniors.

    Read more of this article

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    When Should Married Men Claim Social Security Benefits?

    Posted on March 21, 2008 by Jason

    Center for Retirement Research at Boston
    College    , March 2008

    Most married men claim Social Security benefits at age 62 or 63, well
    short of the age that maximizes the expected present value of the
    average household’s benefits.  That many married men “leave money on
    the table” is surprising.  It is also problematic.  It results in much
    lower benefits for surviving spouses and the low incomes of elderly
    widows are a major social problem.  If married men delayed claiming
    Social Security benefits, retirement income security would
    significantly improve.  This brief
    focuses on the potential gains from delayed claiming and the factors
    that may influence claiming behavior.  It then considers possible
    policy responses.

    Read more of this article

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