Archive for March, 2010

Annuity is no magic answer to retirement-income shortfall

Posted on March 31, 2010 by Jason

Philadelphia Inquirer, March 30th, 2010

For seniors, an annuity can be an appealing source of income, but it
also raises questions.

This week’s advice is from Sacramento, Calif., investment adviser
Michael R. Tate and estate planning attorney Tracy M. Potts.

QUESTION: My husband died in November and I only have his
Social Security income, plus $250,000 in insurance money that I want to
invest. To supplement the Social Security, I need about $2,500 more a
month in income. With the market as changeable as it has been and
interest rates so low, I can’t figure out where is safest to invest. I
cannot afford to lose a penny as it has to last as long as I will. I am
73.

What would you suggest? What do you think of an annuity?

ANSWER: First of all, I am sorry for your recent loss.
These times can be very challenging emotionally, let alone layering on
the challenges related to financial matters.

You raise a question we get often: the need for current income without
risking principal. Your additional $2,500 per month equates to $30,000
per year, which would represent a withdrawal rate of 12 percent from the
insurance proceeds in the first year. To make sure that money does not
run out, you would need to generate in excess of a 12 percent return.

Unfortunately, generating any return at those levels from the stock
market is nearly impossible, at least on a consistent basis. It would
involve a high degree of volatility and risk of principal, which I would
never recommend.

As for an annuity, I would look at some of the discount brokerage
companies in order to avoid excessive commissions or long surrender
charge periods that we typically see on these fixed-annuity options.

I strongly recommend doing a lot of research before committing to any
type of investment.

For example, I went to the Fidelity Investments’ Web site (www.fidelity.com),
which had an annuity product – based on your age and investment of
$250,000 – with guaranteed income of about $1,790 per month during your
lifetime, with nothing going to your heirs.

Read more of this article.

Annuity Advice for Retirement:   It’s always a good idea to get as much information as possible before deciding on whether an Annuity is right for you.  You can conduct the necessary research at NewRetirement.com.

Reverse Mortgage Saves Homes from Tax Auctions

Posted on March 31, 2010 by Jason

Reverse Mortgage Daily, March 31st, 2010

Tax Collector Jane Berendsen-Hill told the Ridgefield Press that two homeowneers were able to
save their homes after they were auctioned in the town’s tax sale by
using a reverse mortgage.

“They stayed in the ownership of the original owners and we got the
taxes,” she said to the Board of Finance. The news was met with some
applause from the small group attending the meeting said the Ridgfield
Press.

According to the press, the homeowners had six months form the date
of the auction to pay off the debts in order to keep the houses. Ms.
Berendsen-Hill said at the time that the tax auction was a necessary
part of enforcement but she was hopeful the homeowners could keep the
homes. All of the homes were several years delinquent on town taxes.

“We still have people who are very delinquent but not near the first
group [in the tax sale],” Ms. Berendsen-Hill said. “I’m not going after
anyone who is coming in and making an honest effort, no matter how
meager, to make payments and catch up. I think that is the only
reasonable thing to do at this time.”

Read this article.

About Reverse Mortgages:  Whether or not you find yourself in a position as dire as that of tax auctions for your house, a reverse mortgage can materially improve many people’s financial situations.  Consider the options at NewRetirement.com

Genworth Life Insurance Company Launches Total Living Coverage(R) Annuity

Posted on March 31, 2010 by Jason

PR Newswire, March 29th, 2010

Genworth Financial, Inc., (NYSE: GNW) announced today a new product
addition to help consumers move toward financial security and
independence.  Total Living Coverage® Annuity (TLCA) is a
linked-benefit product that links the safety and tax-deferred growth of a
single premium non-qualified deferred annuity with a long term care
(LTC) insurance rider to provide LTC benefits. The product will be
underwritten by Genworth Life Insurance Company.

“The financial
challenges facing Main Street consumers today have never been greater,”
said Buck Stinson, President of
Genworth’s U.S. Life Insurance Products.  “With Total Living Coverage
Annuity, consumers use their annuity value to purchase long term care
insurance coverage up to three times the amount of their single premium,
creating a pool of benefit dollars for long term care expenses paid
first from the annuity value and then from the remaining pool.”

In addition, claim
payments for covered long term care expenses are tax-free, allowing
consumers to keep more of their own money – thanks, in part, to tax
benefit provisions in the Pension Protection Act of 2006 (PPA).
Consumers may be able to fund TLCA with a tax-free 1035 exchange from an
annuity or life insurance policy.(1) “With TLCA, consumers who want to
purchase long term care insurance can now utilize additional sources of
funding to help them gain this protection,” said Stinson.

TLCA advantages
include:

  • Dependable and stable growth  
  • Protection
    in the event of a long term care need with guaranteed renewable long
    term care insurance
  • Simplified underwriting process
  • Optional
    inflation protection
  • Waiver of monthly long term care charge
    provision

Read more of this article.

Annuity Advice for Retirement:   For more general information on annuity programs, and how they can fit into your overall financial portfolio in retirement, you can browse the freely available information and analysis on NewRetirement.com

Baby Boomers Can Now Apply for Medicare Online at Social Security Website

Posted on March 30, 2010 by Jason

Senior Journal, March 29th, 2010

Cast of Patty Duke Show helping agency responsible
for Social Security & Medicare enrollment

The millions of baby boomers flooding across the
age marker
that signals they are a senior citizens – the age of 65 – will be
pleased with news from Social Security that you can now register for
Medicare benefits online, if you are not ready to also sign up for
Social Security. Patty Duke and the cast of her 1960s sitcom, The
Patty
Duke Show, are helping spread the word.

Michael J. Astrue, Commissioner of Social
Security,
said this new online application, which takes less than 10 minutes to
complete, is for people reaching the Medicare eligibility age of 65
who
want to delay filing for Social Security retirement benefits. 
Currently
about a half million Americans enroll in Medicare each year without
applying for monthly benefits. Social Security is responsible for
enrolling Americans in both programs.

“Social Security’s online services are the best in
all of government and exceed the top private sector companies in
customer satisfaction,” Commissioner Astrue said. 

“The new Medicare application is a welcome
addition
to our suite of online services and will make it easier than ever to
sign up for Medicare.  I am thrilled that Patty Duke has once again
volunteered to help us get the word out. 

“The fact that this time her TV family has joined

her makes this even more special and I thank William Schallert, Eddie
Applegate, and Paul O’Keefe for their service to America.  I also want

to thank Dr. David Kessler, former FDA Commissioner, who appeared with

Patty as a befuddled family physician in some of our spots.”

Here is how it’s done

To apply online for Medicare do the following.
   ? go to

www.socialsecurity.gov and
   ? choose Retirement/Medicare under the header, “Select Below To
Apply
For.”

You will be asked a brief series of questions. 

If you have a question or need additional
information, there are “more info” links. 

When you’re done, just select the “Sign Now”
button
to submit the application. 

Read more of this article.

Supplemental Medicare Insurance:  This new service helps seniors to sign up for and receive Medicare benefits much more easily, but if Medicare is not enough to cover your health care needs, you may wish to consider the option of supplemental health insurance.  You can research the possibilities on NewRetirement.com.

Making Sense of the Health Care Law

Posted on March 30, 2010 by Jason

The New York Times, March 30th, 2010

Confused by the new health care law? Today’s special section on
health reform in Science Times helps you figure out what it might mean
for you.

What’s
in It for Me? by Tara Parker-Pope: Read my Q&A to find
out exactly how the new law is going to affect you right now.

Lowering
the Cost of Womanhood by Denise Grady: Until now, it has
been legal in most states for insurance companies to engage in “gender
rating,” that is, charging women more than men for the same coverage.

Paying
for Others’ Bad Habits by Sandeep Jauhar, M.D.: The
majority of Americans say people with unhealthy lifestyles should pay
more for health insurance. But personal responsibility is a complex
notion.

Mental
Health Parity by Sarah Kershaw: The law makes it possible
for millions to get the same coverage for illnesses like major
depression or schizophrenia as they would for diabetes or cancer.

Affordable
Long-Term Care by Paula Span: Little noticed in the new
health law is an insurance plan that will help people with long-term
health problems.

Reforming
an Eroding Doctor-Patient Bond by Pauline Chen, M.D.: The
doctor says, “Here are your prescriptions, and make sure you get the
M.R.I.” But the patient is thinking, “I can’t afford all these
medications, or the M.R.I.”

Read more of this article.

NewRetirement Retirement Calculator:   The new health care bill will drastically change many elements of your financial planning for retirement.  If you wish to determine how best to proceed from here, you should consider employing the NewRetirement Retirement Calculator to best proceed.

Healthcare reform: What’s in it for our seniors?

Posted on March 30, 2010 by Jason

The Los Angeles Times, March 30th, 2010

Healthcare reform has made seniors, by and large, uneasy. Older
Americans heard the words “cuts” and “Medicare” in the same sentence and
were more likely to believe healthcare reform would hurt — not help –
them. Lost in the maelstrom of misinformation, however, is the reality
that the newly passed legislation lays the groundwork for greatly
improving the full continuum of healthcare services for seniors, which
includes renovating our nation’s nonexistent long-term care system.

With
high numbers of adults over age 85 and the coming onslaught of aging
boomers, creating a platform for meaningful long-term care reform could
not have come at a better time.

A Lake Research Partners poll
supported by the SCAN Foundation last June found that nearly 80% of
adults (age 18 and over) were supportive of healthcare reform if it
included improved options for community-based long-term care. This means
creating alternatives to nursing home placement, such as day-service
programs, home-care aides, meal programs, senior centers and
transportation services. Several provisions in the bill address this
aim.

First is the creation of a public, voluntary long-term care
insurance program known as the Community Living Assistance Services and
Supports program — CLASS for short. Enrolled individuals who have
substantial daily needs would be eligible to receive at least $50 a day
(after a five-year vesting period) to be used to defray the costs of
services such as home care, family caregiver support, adult day-care or
residential care. All actively working adults over 18 could enroll, with
the purpose of getting the largest risk pool possible.

Read more of this article.

Long Term Care Insurance:   Long Term Care Insurance is a vital part of anyone’s retirement portfolio.  Consider how to afford and how to integrate it into your retirement plans at NewRetirement.com.

4 ways to tackle massive credit card debt

Posted on March 29, 2010 by Jason

Bankrate.com, March 30th, 2010

Dear Debt Adviser,
My husband had to take an early retirement for medical reasons. We owe
about $50,000 in credit
card debt. We can pay our house, utility, car and living expenses,
but we have very little left for paying the credit cards. We don’t want
to file for bankruptcy but would like to work with the credit
card people to reduce our debt by 50 percent and pay them off with
our retirement
savings. What is the best way to go about this?

– Barbara

a_v2.gifDear Barbara,
I’m sorry to hear about your husband’s medical problems. I hope everyone
who thinks he can control his retirement date or whose retirement
plan is to “work until I die” gets a dose of reality from your
situation. Your husband was forced into early retirement for medical
reasons long before he planned and may be unable to produce an income
for the foreseeable future. Without income earned by your husband, your
earning potential and any retirement benefits are the primary sources of
income for both of you. I believe you are going to need every bit of
your retirement savings.

From my perspective, the key to your
decision lies with your ability
to earn enough income to handle your credit card debt. With
finances as tight as you describe, I do not believe using retirement
savings to pay off your credit cards, even at a 50 percent reduction,
would be your best option.

Please indulge me for a minute for an
aside for my readers. Your financial situation is an excellent example
of why it is a bad idea to carry large amounts of credit
card debt. It’s a really bad idea for anyone approaching
retirement. You are rocking along just fine, making more than the
minimum payment when something unexpected happens that reduces your
income. Immediately, you are unable to meet even the minimum payment.
That is why if you are carrying more than $5,000 in credit card debt,
planning to pay it down as quickly as possible is a very smart
financial move.

Read more of this article.

Pros and cons of variable annuities

Posted on March 29, 2010 by Jason

Christian Science Monitor, March 29th, 2010

Are Annuities Right for You?

How many times have you gone to meet with a financial advisor and
they offer you an annuity? How many times have you heard about how awful
annuities are? The truth is annuities very rarely make good investment
vehicles.

In light of the recent market volatility, variable
annuities are being reintroduced to a broader audience. Pre-retirees and
retirees are giving annuities a second look because of the tax-deferred
features and income guarantees. Is an annuity right for you? Let’s take
a look at a few of the basics:

What is an annuity?

An
annuity is a contract between you and a life insurance company that
promises you lifelong income in exchange for a lump sum payment or
series of payments to the insurer. The income arrives in periodic
payments, either at once (an immediate annuity) or in the future (a
deferred annuity, which also offers you tax-deferred growth of the
assets inside it).

A look at the Pros and Cons of Annuities

As
an independent financial advisor who gets paid a fee only rather than
commission, I am always looking at the pros and cons of various
investments. Let’s take that same approach with an annuity. There
generally are two types of annuities – fixed or variable annuities. Fixed are tied to
interest rates or indexed annuities tied to various indexes and variable
are tied to the investment performance of the mutual funds within the
policy. Let us look at the good, bad, and ugly features of the most
popular type of annuities- variable.

The Good

Annuity
ownership does come with some attractive benefits such as:

1.
Flexibility and investment choices – Variable annuities have
sub-accounts with various mutual funds to select from. This makes it
easy to change investment direction or your allocations with little or
no costs.

2. Tax deferral for your investment gains – Just
like your 401k or IRA, your contributions and earnings can grow
tax-deferred until you withdraw funds. If this is in a non-qualified
account (non IRA or retirement), you do not have to make mandatory
withdrawals at age 70 ½.

3. Income for life – I will
concede that no other investment allows for the creation of income for
life. Once you select monthly payments (or annuitize) your annuity
contract, the insurance company will guarantee you (and your spouse,
should you desire) the income payment for the rest of your life. This is
like creating your very own pension!

4. Asset protection –
In certain states, annuities are a shelter from creditors. If you work
in a field prone to lawsuits or even if you are in a car accident,
protecting your assets is important. Annuities typically provide this
type of protection.

5. Potential protection from market losses.
Many variable annuities let you benefit from stock market gains while
shielding you against stock market losses. In the past, many have
offered the annuity holder at least a minimum rate of return (a GMIB, or
Guaranteed Minimum Income Benefit). Many have also offered guarantees
that the annuity value will not dip below the value of the initial
principal (a GMAB, or Guaranteed Minimum Accumulation Benefit). However
keep in mind these guarantees are expensive and come with many strings
attached. So buyers beware.

The Bad

1.
Irreversible consequences. The idea of income for life sounds
enticing but here are a few cavots. For example, once you annuitize
(create income for life or a period of time), it often becomes
irreversible. You often give up the ability to get your lump sum back or
even pass it to “other beneficiaries”. So say you put $250,000 into an
annuity at age 60 and accept the insurance company’s offer to pay you a
monthly income for the rest of your life. It could take 20 to 25 for you
to break even on that investment.

Read more of this article.

Annuity Advice for Retirement:   Annuities are an important tool, but are they right for you.  Learn more about them at NewRetirement.com

Options Expand for Affordable Long-Term Care

Posted on March 29, 2010 by Jason

The New York Times, March 29th, 2010

More than most 41-year-olds, Elizabeth Priaulx thinks about her eventual
need for long-term care. A lawyer in Washington, she has coped well
with cerebral palsy since childhood, but has
lately developed painful President
Obama signed last week.

The Class Act, a legacy of Senator Edward
M. Kennedy (whose widow and son were on hand for the signing), sets
up the first national government-run long-term care insurance program,
which will be offered primarily through employers.

Long-term care means help with the so-called activities of daily living —
like bathing, dressing, getting in and out of bed and using a toilet —
for those, old or young, who become disabled. More than 10 million
Americans need long-term care, nearly 60 percent of them 65 or older, Georgetown
University researchers reported in 2007. But few are prepared for
the expense.

Last year, realizing that she might need help before many years pass,
Ms. Priaulx logged onto a long-term care insurance Web site, plugged in
her age and health information — Ms. Priaulx also takes antidepressants and has developed a seizure disorder — and came up with a
discouraging price quote: her premium would be $1,700 a month.

Even if she could pay that amount, she doubts any private insurer would
approve her application for coverage. “With a history of cerebral palsy,
mental illness, seizures, I think I’d be denied,” she said.

Read more of this article.

Long Term Care Insurance:   Long Term Care insurance is a vital part of retirement planning.  You should consider whether or not it is a good option for you or your relatives, by learning more at NewRetirement.com.

10 Signs You’re Not Ready to Retire

Posted on March 26, 2010 by Jason

Main Street, February 17th, 2010

Hopes for an economic upswing may rekindle ideas of a blissful
retirement, but when will you really be ready?

Nearly a third
of working people aged 55 or older have less than $10,000 saved for
retirement, according to a 2009 Retirement Confidence Survey. But even
if you’ve saved more than that, deciding when to retire has gotten more
tricky.

Our financial futures are uncertain, 65 is no longer
the default retirement age and it can be difficult to determine how much
you’ll need in order to really enjoy retirement (or at the very least
live comfortably).

So if you’re approaching your twilight
years, here are some signs that you might not be ready to retire just
yet.

You Haven’t Done the Math

Scenario: If you haven’t made
lists or done any calculations to figure out just how you’ll cover
day-to-day expenses, travel and holidays, you’ll have to give more
thought to how much savings you’ll need to make it through retirement.

What you can do: If you’re among this group, or you just want to
get a handle on what you’ll need to retire, there are plenty of online
tools you can use to figure out how much you’ll need and what kind of
lifestyle your money will afford you when you do decide to retire.

You
Need to Play Catch-Up

Scenario: If you haven’t socked enough
away in your 401(k), don’t panic. You have some options.

What
you can do: If you’re 50 or older, you can make catch-up contributions
of an additional $5,500 – that’s on top of the maximum of $16,500 if
you’re under 50 – to your 401(k) or IRA to make sure you’re on track to
retire when you want to, notes Kiplinger’s Personal Finance.

Read more of this article.

NewRetirement Retirement Calculator:   If your retirement plan is not finished, or you aren’t ready to retire, the NewRetirement Retirement Calculator can help you figure out the next step.

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