Archive for February, 2010

Brokers push to put annuities into planning framework

Posted on February 24, 2010 by Jason

Investment News, February 23rd, 2010

In an attempt to pull further away from the transactional nature of
annuity sales, brokerage executives are using tools to help their
advisers fit product sales into a planning context.

“It’s a process — retirement income — and more detailed conversation
is needed,” Ed O’Connor, managing director of UBS Financial Services
Inc., said during a panel discussion Monday “Retirement income –
Service or Product?” at the Insured Retirement Institute’s annual
marketing conference in New York. “The conversation and the planning
tools help you parse out what’s most important to clients.”

Asking
clients about their fears — of both the markets and of running out of
income during retirement — can help advisers plan for their clients’
needs, particularly when discussions goes hand in hand with planning
tools, distribution executives said.

“There’s skepticism, fear
and an element of distrust,” said Michael Stern, a panelist and
national sales manager at Morgan Stanley Smith Barney LLC. “It’s very
apparent that advisers want this integrated with their overall wealth
management plan.

Since last year’s merger of Morgan Stanley and
Smith Barney, the combined firm has kicked off an initiative called
“the Retirement Standard.”

“It’s really centered around
building competencies and awareness,” said Mr. Stern. The initiative
involves a checklist to ensure that advisers are weighing factors such
as Medicaid elections, pension elections and health care awareness.

Read more of this article.

Annuity Advice for Retirement:   Annuities are an important tool for planning your retirement, one that you should consider when sketching out your intentions.  Consider the options available to you at NewRetirement.com

When you should, shouldn’t give out your Social Security number

Posted on February 24, 2010 by Jason

Credit Cards.com, February 24th, 2010

Your Social Security number is one of the keys to your financial
health. It’s a unique indentifier lenders use to assess your
creditworthiness. It’s also exactly what a would-be thief needs to
apply for a credit card, mortgage, car loan or job in your name.

If you’re like most Americans, it’s also something you give out all too frequently.

“As with so many procedures in the business world, your Social Security
number is something that many companies ask for, so no one really
questions it,” says James Van Dyke, president of Javelin Strategy &
Research, a research firm that tracks financial services topics. “But
giving out your Social Security number is definitely a practice
consumers should think twice about.”   

Case in point: A recent Javelin Strategy & Research report — the 2009 ID Fraud Survey — found that, among identity theft
victims, 38 percent said the perpetrator had obtained their Social
Security number and used it in the crime. “It’s certainly logical to
say that you could eliminate 38 percent of your risk of identity theft
by limiting access to your Social Security number,” says Van Dyke.

‘Your Social Security number, please’
Still, saying it and doing it are two different things. Many of the
forms you encounter during the day — at doctor’s offices, at the
dentist, at your child’s school — ask for Social Security numbers.
Retailers may ask for it, too, when accepting a check for payment or
before issuing check cashing privileges. Potential employers also need
it, and they may even want a copy of the actual card, says Linda Foley,
founder of the San Diego-based Identity Theft Resource Center (ITRC).
You’ll also be asked for it at your local Department of Motor Vehicles,
car dealerships, pawnshops, drugstores — even at the airport, should
you lose your luggage, she says. In fact, you may be surprised at how
far-reaching this practice is, says Foley.  

“A few years ago, we were putting some of my mother’s things into
storage, and they wanted her Social Security number to use as a
passcode,” she says. “It’s that prevalent.”

Just because someone asks for it doesn’t mean you have to comply, says
Michael J. Arata, the author of “Identity Theft For Dummies,”
especially since there are only a handful of organizations that
actually have a valid need for it. For instance, anytime you’re
applying for credit — for a new credit card,
a loan, new telephone or cellular service — the creditor will need
your Social Security number to run a credit check. You’ll also need to
provide it if you are applying for federal or local government benefits
such as Social Security, Medicare or Medicaid, unemployment insurance
or disability. Another example: If you or your children receive
services or aid at the state or local level, such as free or reduced
fee lunch or financial aid. The local motor vehicle department, thanks
to the USA PATRIOT Act, has the legal right to ask for Social Security
numbers, too. In addition, when you complete a cash transaction
totaling more than $10,000 you’ll be required to provide your number so
that transaction can be reported to the Internal Revenue Service, says
ITRC’s Foley.

Read more of this article.

Retirement Risks:  Never give out your social security number if you can possibly avoid it, almost all financial security professionals agree.  You might also consider reading up on other major risks to your retirement at NewRetirement.com

Eight States Have Shortchanged Pensions, Pew Study Finds

Posted on February 24, 2010 by Jason

The New York Times, February 17th, 2010

Eight states have been given failing scores for their pension
management under a new grading system developed by the Pew Center on
the States, which also found a $1 trillion gap between what all 50
states have promised their workers and what they have set aside.

The Pew center said on Wednesday
that Alaska, Colorado, Illinois, Kansas, Kentucky, Maryland, New Jersey
and Oklahoma had, in essence, failed its new test because they made no
meaningful progress on keeping their retiree benefit plans sound. The
worst case was Illinois, with a $54 billion gap between the cost of the
benefits it had promised to pay retirees over the next 30 years and the
amount it had set aside.

“Recessions and investment losses played
smaller roles in the creation of this problem,” said Susan K. Urahn,
the center’s managing director. “To a significant degree, the $1
trillion gap reflects states’ own policy choices and lack of
discipline.”

The center based its measurements on data provided
by the states as of June 30, 2008 — the most recent generally available
— so any changes made since then would not have been factored into the
scoring.

The data also did not capture the worst of the market
crash, which occurred in the fall of 2008. Ms. Urahn said that as a
result, the $1 trillion figure probably understated the problem.

By
devising a simple scoring system for state pension funds, the Pew
center was adding a new layer to the analysis now done primarily by
credit rating agencies like Moody’s and Fitch.
The agencies have increasingly tried to take stock of public retirement
plans when rating how likely each state will be to pay its bonds.

Pension
plans have grown so large and costly in some places that they can
compete with bondholders for scarce state dollars. But ranking them is
notoriously difficult because no two state pension systems are
identical, and the variations can make comparisons extremely
misleading.

Read more of this article.

NewRetirement Retirement Calculator:   Pensions are nowhere near as common as they used to be, and concerns are growing about the ability of state and local agencies to pay off their pension obligations.  Accordingly, it might be a good time to re-evaluate your retirement strategy with the NewRetirement Retirement Calculator.

Downward Mobility and the New Retirement

Posted on February 23, 2010 by Jason

RIS Media, February 23rd, 2010

There we were, a whole generation with the brass ring in sight.
Flush with equity in stocks and real estate, portfolios of blue chips,
bolstered by ERISA protected pensions,
insured by the Pension Benefit Guarantee Corporation and maybe even a
little Social Security. We were going to rock retirement like only
boomers can do.

But, the financial intermediaries beat us to it. Now they’re skiing
in Gstaad and eating Caspian Beluga roe on toast points while we clip
coupons and postpone our golden years indefinitely.

Many who had pension funds will discover that the money owed to
retirees exceeds what is available to pay them. The PBGC, created to
make sure retirees would get their money, reports that as of September
30, 2009, they had only $68.7 billion in assets to cover an estimated
$89.8 billion in liabilities. The PBGC reports that “potential exposure
to future pension losses from financially weak companies” is
approximately $168 billion.

Homeward Bound

More and more households are starting to look like the Walton’s with
three or four generations living under one roof. Aging parents and
underemployed adult children with children of their own are squeezing
boomer households.

Now, we need to bridge the gap between expectations of an idyllic
retirement and the new reality that we may live a very long time and
have to work for most of it, if we can.

A Much Longer Life to Plan For

It’s a whole new ball game. In 1900, average life expectancy was 47
years. There wasn’t any retirement to plan for. Staying ahead of the
grim reaper was a dead sprint and a very short race. Those who lived
longer kept working until they were unable to. Few people lived long
enough to develop dementia.

Read more of this article.

NewRetirement Retirement Calculator:   As the very meaning of retirement changes over time, you may need to update your plans for retiring.  Consider using our NewRetirement Retirement Calculator to do just that.

The HECM at 20 Series: HECM sub-servicing innovator and NRMLA founder

Posted on February 23, 2010 by Jason

The National Mortgage Professional, February 23rd, 2010

In the beginning, there were 50 lenders chosen by lottery in a pilot
program. The U.S. Department of Housing & Urban Development (HUD)
authorized each lender to make just 50 Home Equity Conversion Mortgages
(HECMs), a novel home equity loan without monthly repayment obligations.

HECM presented unique challenges. One of them was servicing. How do
you service a mortgage loan where the lender is required to make
payments to the borrower? How do you manage a mortgage loan where, if
the lender fails to make payments to the borrower on time, the lender
must pay a penalty to the borrower? How do you administer a mortgage
loan with different investor accounting and reporting rules? Servicing
HECMs was foreign territory.

But where others saw challenges, the leader of a large forward
mortgage servicing company saw opportunity. He assembled a team,
studied the servicing requirements of the new mortgage beast, built a
servicing platform, and sold his servicing solution to the 50 pilot
HECM lenders. He did not stop there.

The infant industry built around a product authorized by Congress
and designed in Washington, D.C. lacked a voice in our nation’s
capital. The traditional lenders at the Mortgage Bankers Association (MBA)
were too busy doing what they have always done to fully appreciate the
start-up issues a small but passionate band of reverse lenders were
grappling with. Issues such as consumer and public education to create
awareness of (and combat misconceptions about) reverse mortgages,
commitment authority to fund more loans beyond the experimental cap at
2,500 HECM loans, inefficient count-by-count loan limits that
complicated marketing, decent origination income to fund marketing and
operations, exclusion of cooperatives from the HECM programs, and
others.

So, the leader gathered his handful of reverse tribesmen and women
and told them they needed to take care of themselves, they needed a
presence in D.C. In a 2004 conversation with me, he said:

“I felt that as a group of lenders, it was time to get together
to create a code of ethics and best practices because my message to
them was: ‘If you don’t do it [self-regulate], somebody else will
regulate us. And so, you’ve got to come together as an industry and
adopt a set of best practices.’”

Thus, the National Reverse Mortgage Lenders Association (NRMLA)
was born in 1997 to lead consumer, public, and lawmakers education that
was (and is) essential to the industry. The leader hired Dwobell Inc.,
an association management company, and its owner, Peter Bell, to run
the new trade group.

Read more of this article.

About Reverse Mortgages:  Learn all about reverse mortgages at NewRetirement.com

New retirement plan advice rules coming soon

Posted on February 23, 2010 by Jason

HR Morning.com, February 11th, 2010

In the coming weeks, the Department of Labor is hoping to issue new
rules governing the investment advice given to retirement plan
participants.

The new 401(k) rules are now being reviewed
by the Office of Management and Budget. And the DOL hopes they’ll be
out by the end of the month, said Phyllis Borzi, assistant secretary of
labor for the DOL’s Employee Benefits Security Administration, speaking
at a conference sponsored by the National Institute on Retirement
Security.

Borzi didn’t say exactly what the new rules would cover. But she did
mention they’ll be more faithful to the statutory provision than the
ones we saw issued in the final days of George W. Bush’s presidency
that would’ve allowed advisers affiliated with mutual fund and
brokerage firms to provide investment advice.

Read more of this article.

401(k) and Retirement Accounts:   The new rules issued by the Department of Labor will impact your retirement accounts, and may make it advantageous to roll assets over from one account into another.  Learn more about the options available to you at NewRetirement.com

Kidneys From Older Donors Suitable for Seniors

Posted on February 18, 2010 by Jason

Yahoo News, February 18th, 2010

Too many American seniors
who need a new kidney have to wait longer than necessary for a transplant,
researchers say.

In a new study, Johns Hopkins researchers analyzed kidney donation data
from 2003-2008 and found that one-third of patients over age 65 experience
unnecessary delays because their doctors don’t put them on a list for
kidneys from older donors (extended-criteria donors, or ECDs) that are
unsuitable for younger patients but perfectly fine for older patients.

The findings were published online in the American Journal of
Transplantation.

“Every adult over 65 should be listed by their physicians for ECDs
because the sooner they can get a kidney, the better the chance for
survival,” study leader Dr. Dorry L. Segev, a transplant surgeon and
associate professor of surgery at Johns Hopkins University School of
Medicine, said in a news release.

“A 65-year-old does not need a 20-year-old kidney; they just need a
kidney that will last as long as they will. While young people might have
time to wait for the perfect kidney, older people don’t,” Segev noted.

Read more of this article.

Supplemental Medicare Insurance:   Transplants and other serious medical procedures can easily upset your retirement plans.  Consider looking into additional health insurance to supplement your Medicare at NewRetirement.com

Study: States must fill $1 trillion pension gap

Posted on February 18, 2010 by Jason

Yahoo News, February 18th, 2010

States may be forced to reduce benefits, raise taxes or slash government services to address a $1 trillion funding shortfall in public sector retirement benefits, according to a new study that warns of even more debilitating costs if immediate action isn’t taken.

The Pew Center on the States released a survey Thursday of state-administered pension plans, retiree health care
and other post-employment benefits in all 50 states that blamed a
decade’s worth of policy decisions for leaving them shortchanged.

The result for some states will be “high annual costs that come with significant unfunded liabilities, lower bond ratings, less money available for services, higher taxes and the specter of worsening problems in the future,” the study said.

The
cost of the trillion-dollar shortfall, which will be paid over the
coming decades, is about $8,800 for each American household. The study
did not include many city, county and municipal pension plans, which
are thought to have similar underfunding.

“We
have a significant problem now, but it’s a problem that can be solved
by taking relatively modest steps,” said Susan K. Urahn, the center’s
managing director. “If they don’t do anything, if they wait, eventually
they will have an unmanageable crisis on their hands.”

As
of 2008, states had $2.4 trillion to meet $3.4 trillion in promised
pension, health care and other post-retirement benefits, according to
the report.

The true gap may even be wider,
because the study did not account for the full impact of investment
losses in late 2008, during the stock market downturn, and because many
plans employ multiyear smoothing techniques to lessen the effect of a
single year’s losses. But more recent stock market returns could help — on Wednesday, for example, Pennsylvania‘s $47 billion public school pension plan reported it had earned about 12 percent on investments in the 2009 calendar year.

Read more of this article.

NewRetirement
Retirement Calculator:  Whatever the status of your pension, it might be a good idea to look at how your retirement benefits will integrate with the rest of your retirement plan.  Consider using the NewRetirement Retirement Calculator to do so.

Words for Seniors Facing Loss

Posted on February 17, 2010 by Jason

The New York Times, February 10th, 2010

My father is a relentlessly upbeat guy. “Up and around!” he reports
when I call. “Keeping busy!” He tells me about his volunteer work, his
card game winnings, the (seated) yoga class he enrolled in at the
library. His favorite refrain is, “I can’t complain.” (And yes, yes,
yes, my sister and I do know how lucky we are.)

He does tell me about the funerals, though. At 87, watching his
peers struggle with the physical and psychological trials of old age,
he goes to a lot of them. He keeps losing people he’s known for years —
onetime co-workers, senior members of his synagogue, neighbors in his tightly knit apartment building.

His friend Molly, too frail in her 90s to remain alone in her house,
recently moved to the Midwest to live with her son; they’ll probably
never see each other again. The weekly card game now involves an
entirely different group of guys than when he started years ago, and it
sometimes stalls for several weeks as the players have health crises or
move or die. Replacement players are growing harder to find.

“These things keep happening when you’re over 80,” he told me.

He goes to funerals because, he said: “It’s just the right thing to do. It shows that you feel bad, that you’ve lost a friend.”

What do you say to this litany? You want to offer something
reassuring, something to lighten the sense of loss, but you can’t evade
the reality: He’s outliving his friends and family members. His cohort
is thinning.

Luckily, I can turn for counsel to Barbara Moscowitz,
senior social worker at the Massachusetts General Hospital’s Senior
Health program. (One benefit of writing this blog is that you can call
up experts and pose questions, supposedly on behalf of readers, that
you really want answered yourself.) Ms. Moscowitz hears such litanies
from clients and their adult children all the time.

Read more of this article.

It can be incredibly difficult for seniors who are beginning to outlive their friends and loved ones.  While we at NewRetirement primarily concern ourselves with the financial aspects of retirement that face seniors, dealing with situations such as this are also part of many seniors’ lives.  While there is no cure for grief or loss, there is also no maximum age beyond which it is impossible to try new things or meet new people.  For that reason, some seniors consider Working in Retirement.  A part-time job, or volunteer work in retirement can provide opportunities to meet new friends and co-workers.  Consider looking into these possibilities at NewRetirement.com

Mammograms and Severe Dementia

Posted on February 17, 2010 by Jason

The New York Times, February 15th, 2010

I’m trying, with some difficulty, to imagine myself as a woman in
her 80s, someone with such advanced cognitive impairment that I can
correctly answer fewer than a third of the questions on a commonly used
test. I might not know who the president is, or what day or date it is;
I might not be able to remember a few nouns the test giver just
recited. Asked the question, “What is the object used to cut paper?” I
might not be able to come up with the word scissors.

Now, I’m trying to imagine technicians undressing me and getting me
set up for a mammogram, a screening test whose purpose I may not
understand. I’m betting the test would cause some discomfort (ask me
how I know). I might also find it frightening, disorienting,
threatening. It’s unlikely to do me any good, and it could do me some
harm.

This is not such an imaginary premise.

Epidemiologists at the University of California, San Francisco, have
been analyzing the Medicare records of women over 70, focusing on a
sample of 355 with severe cognitive impairment but no history of breast
cancer. They’ve come up with a classic good news-bad news picture.

Their study, published last month in the online American Journal of
Public Health, points out that according to broadly accepted medical
principles, a woman with a life expectancy of less than four to five years is unlikely to benefit from screening mammograms [pdf] (as opposed to the diagnostic sort for patients with a suspicious lumps).

Most women in the study with severe dementia didn’t live that long.
This is a progressive disorder, and most of women in the study also had
other diseases. “We could make a strong case that the severely
cognitively impaired group, most of whom were over 80, had an average
life expectancy of 3.3 years,” Dr. Kala Mehta, who led the study, told
me in an interview.

Read more of this article.

Supplemental Medicare Insurance: 
Medicare will cover mammograms, but often other medical procedures,
drugs, and preventative care falls between the cracks.  Before making
decisions as to what types of care are and are not necessary, it is
important to evaluate what insurance options are available beyond
Medicare.  You can do this at NewRetirement.com.

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