Archive for June, 2010

Taking a conservative approach to reverse mortgages

Posted on June 30, 2010 by Jason

Reverse Mortgage Daily, June 29th, 2010

Taking a conservative approach to writing reverse mortgages, Sun West
Mortgage, Cerritos, Calif., prefers to be careful on the front-end and
“aggressive” on the servicing side, according to Pavan Agarwal,
vice-president of the family-owned firm. Agarwal, who joined the company
right out of college, says Sun West is “proactive in servicing,”
particularly when taxes come due,” calling borrowers to remind them.
“Most seniors don’t default because they intend to,” Agarwal notes,
“but, rather, they forget to make the payments. It’s mostly a training
and re-education” issue, he says.

Not surprisingly, origination volumes are down lately at Sun West,
which got into the reverse mortgage business in 2004. Agarwal tells RMD
that the company has experienced a 30 to 40 percent reduction in HECM
volume this year due to the reduced principal limit factors and a
depressed housing market. “However, Sun West has more than compensated
for the drop through an increase in its FHA forward and commercial
lending channels,” he assures listeners.

However, the generally depressed housing market is an area of
concern, says Agarwal, explaining that reverse mortgage originators
should be beware of investors who attempt to put a senior in an
upside-down property. “If you originate a loan like that,” he warns,
“you [end up having] seniors who may not be committed to the property;
who may never have owned a property before and doesn’t understand what
the responsibilities of a homeowner are.”

Read more of this article.

About Reverse Mortgages:  Conservative approaches are all well and good, but generally speaking, the best approach to something like a reverse mortgage is to get all of the options available to you on the table.  NewRetirement can help you do that.

Getting the most out of Social Security

Posted on June 30, 2010 by Jason

News Observer, June 27th, 2010

Q: I’m 66 and my wife will soon be
62. I love my work, plan to work until age 70 and delay my Social
Security benefits until I retire.

For most of our married life, my wife stayed
at home, raised our children, took care of the house and supported me in
my career. She did work outside the home for a brief period before we
had children and is eligible for a small amount of Social Security based
on her own earnings.

We
want to maximize the Social Security benefits in our old age because we
both come from families with a history of living well beyond age 90.
Even though we don’t need the extra income while I’m working, she would
like to begin taking her benefit at age 62. We know this will have an
impact on the amount of benefit she will receive, but once I start
taking my Social Security, she can switch to a higher spousal benefit,
correct?

That’s kind of correct but not the complete story.

For those
born between 1943 and 1954, full retirement age for Social Security
benefits is 66. Benefits will be reduced by 25 percent if they are taken
at age 62. It’s nice that you can continue to work and delay your
Social Security benefits.

As you probably
know, this will increase your full retirement benefit by 8 percent for
each year you delay after your full retirement age. There is no benefit
of delaying past age 70. Delaying benefits to age 70 will not only give
you a higher benefit during your lifetime; it will also provide your
wife with the highest survivor benefit should you die before she does.
This higher amount will also be of benefit as cost of living adjustments
(COLAs) are calculated.

Read more of this article.

Social Security Optimization:  The strategy for guaranteeing your maximum benefits is complex and requires some forethought.  NewRetirement.com has the resources that can help you decide how best to proceed.

Reverse mortgages now a less-costly lifeline

Posted on June 28, 2010 by Jason

Marketwatch, June 28th, 2010

Upfront fees on reverse mortgages have fallen
substantially in recent months, giving homeowners interested in this
product a new challenge: how to best compare offers to find the best
one.

“Quite a few of the lenders now have reduced the origination fees,” said
Barbara Stucki, vice president of home-equity initiatives for the
National Council on Aging. “Some of them are getting rid of the
origination fees. Some are willing to pay some of the mortgage-insurance
premium fees up front.”

It’s an important development for reverse mortgages, which have in the
past faced criticism for charging high upfront costs, said Peter Bell,
president of the National Reverse Mortgage Lenders Association.

Stay in your home

A reverse mortgage allows homeowners tap their home’s equity while they
remain in the house. The amount available to the homeowner depends on
his or her age and the home’s appraised value, among other things.
Payments can be made in a lump sum or in regular installments, or a home
equity line of credit can be established, according to the Department
of Housing and Urban Development’s website. Visit the
HUD website.

Reverse mortgages are available to homeowners who are 62 years old or
older and own their homes outright or have a substantial amount of home
equity, according to the HUD site. The vast majority of reverse
mortgages are insured by the Federal Housing Administration, through the
Home Equity Conversion Mortgage (HECM) program.

Read more of this article

About Reverse Mortgages:  With competition beginning to bring the fees down, now might be a good time to consider whether a reverse mortgage is the right move for you.  NewRetirement can help you make that determination.

I retired. Now how do I unretire?

Posted on June 28, 2010 by Jason

Fortune Magazine, June 26th, 2010

You retired. But that was then. Now things have changed, and you want
— or need — to return to the workforce. Jumping back in may seem
daunting, but it doesn’t have to be, says Age Wave CEO Ken Dychtwald, an
expert on boomers and aging. The challenge of finding a job — again –
isn’t just about the mechanics, like writing a résumé for the first
time in years or convincing a potential employer that you’re a better
hire than the perky young college grad he just interviewed. It’s also
about altering your mindset and realizing that this may be a new
beginning. Here’s Dychtwald’s advice on how to make your way back onto a
company payroll without too much stress.

Reframe what work
means

Having to go back to the office when you dreamed for years about
puttering in your garden or volunteering can be frustrating, even
depressing. But retirement isn’t all it’s cracked up to be either. For
most productive, well-educated men and women, an average of 25 years of
“leisure” can be terribly isolating and boring; returning to work may
turn out to be a blessing after all. Remember that work is good not only
for the cash flow but also keeping the mind and spirit sharp.

Don’t
play the youth game

This is an area where people make a lot
of mistakes. They dye their hair (if they have any), get some hip, new,
young clothes — even though they might not fit — and try to use the
jargon and style of youth. That doesn’t work. A better idea: Go on the
offensive and sell yourself as a mature person. Stress your capacity to
make smart decisions, your good judgment in managing people, your
contributions in brainstorming and business development, and your
lifetime connections. This is your advantage.

Read more of this article.

Working in Retirement:  Getting back into the game is not easy, whatever the above article says.  Still, it can be made easier through the use of assistance programs specifically for retirees and seniors.

10 Things Retirees are Doing Without

Posted on June 24, 2010 by Jason

US News & World Report, June 24th, 2010

Retirees have watched their nest eggs shrink over the past two years.
Cutbacks in spending have been necessary and painful. Some 60 percent
of retirees say they have reduced expenses since 2008, according to a
recent Harris Interactive survey
of 501 retirees underwritten by Principal Financial Group.
The retirees largely say they are planning to stick with these frugal
changes regardless of future economic conditions. Here’s a look at the
things retirees are
learning to live without.

Meals out. Even early bird specials and senior
discounts aren’t enticing retirees to spend more to eat out. Instead,
many retirees are preparing more meals at home (55 percent) and a few
are even cutting back on take out coffee (9 percent).

Balmy temperatures. A popular way for retirees to
save money is to lower the thermostat at home (47 percent). A big part
of winter in retirement could
be warm sweaters and hot drinks.

New clothes. Retirees don’t need professional work
clothes or to pay for dry cleaning. Some frugal seniors have also
started to shop in their own closets instead of making new purchases (35
percent) and finding must-have items at thrift or consignment stores
(29 percent).

New books and movies. Although retirees generally
have more time for books and movies, they don’t have as much disposable
cash to get the latest releases at full price. Many retirees (19
percent) say they frequently visit the local library to check out both
books and videos.

Impulse purchases. Clipping coupons, waiting for
sales, and buying in bulk (24 percent) is standard procedure for many
retirees. Retirees are increasingly comparison shopping online and
asking for senior discounts.

Home improvement projects. To save money, many
retirees are considering delaying home improvement projects (34
percent). Seniors are also doing their own home painting, lawn care,
cleaning, and other household maintenance and chores instead of hiring
outside help (33 percent).

Debt. Since the recession began in 2008, many
retirees have taken steps to eliminate their debt (36 percent). Instead,
seniors are striving to live within their means (62 percent) and follow
a budget (32 percent). To make sure they don’t take on debt again many
retirees have an emergency fund (28 percent) and are taking steps to
protect their nest egg (37 percent).

Pricey transportation. Retired couples
are usually able to downsize from two cars to one. Some retirees are
also considering buying a more fuel efficient car (16 percent) and have
started carpooling or taking public transportation (3 percent).

Read more of this article.

Data shows older Americans greatly impacted by recession

Posted on June 23, 2010 by Jason

Reverse Mortgage Daily, June 22nd, 2010

While the current recession has affected nearly every household in
the United States, evidence shows that the economic crisis has been
particularly severe for our country’s most vulnerable groups: children,
the elderly, and the poor, practically erasing decades of improvement in
material well-being.

The American Life Panel (ALP) and the Health and Retirement Study
(HRS), along with support from the National Institute on Aging and the
Social Security Administration, have enhanced collected data through a
series of surveys. They asked households about their financial
situations through areas such as spending behavior, retirement plans,
and other areas affected by the recession. Michael Hurd and Susann
Rohwedder of the RAND Corporation performed analysis’s showing profound
effects the economic crisis had on the majority of households in America
with a little over 70 percent of those ages 40 and up feeling that they
had been affected “a little” or “a lot.”

Researchers focused on households that were suffering immediate
financial distress, or that that fell into the categories of being more
than two months behind on mortgage payments, having negative equity on
their homes, foreclosure, or being unemployed or having an unemployed
spouse.

Ten to 15 percent of homeowners over 40 years of age found themselves
affected in one of these categories between November 2008 and January
2010, varying across demographic and socioeconomic groups. While wealthy
and older homeowners experienced less financial distress than
low-income and younger homeowners (40 to 64 year olds), the probability
of delayed retirement increased. Older homeowners (65 years old and
older) also reported less negative home equity issues (4 percent) than
younger homeowners (9 percent).

Read more of this article.

Retirement Calculator:  If you’ve been seriously impacted by the recession, then it’s never too late to take another look at your overall financial situation.  Our Retirement calculator can help you do just that.

Long Term Care Costs Continue to Rise says Study

Posted on June 23, 2010 by Jason

Reverse Mortgage Daily, June 23rd, 2010

While long term care costs continue to rise nationally, the cost for
in-home care is rising at a much slower pace according to an annual
survey from Genworth Financial.

The cost to receive care in the home has risen at an annual rate of
just 1.7 percent over the past five years, compared to increases of 6.7
percent for assisted living facilities, and 4.5 percent for a private
room in a nursing home, over the same period.

Another survey conducted earlier this year found that when asked to
identify the setting most preferred to receive long term care, 78
percent chose the home, 18 percent chose assisted living, and only 2
percent selected a nursing home. For most people, the ability to live
independently is critical to maintaining quality of life.

“Long term care is not just about nursing homes anymore. Care options
have expanded dramatically over the past several years to include a far
greater choice of settings that reflect the ways in which individuals
prefer to receive care,” said Buck Stinson, President, U.S. Life
Insurance Products at Genworth. In fact, 73% of Genworth’s initial
benefit claims are for home health care.

Read more of this article.

Long Term Care Insurance:  The increasing cost of Long Term Care makes the economics of Long Term Care insurance make more and more sense.  If you’re of the appropriate age for Long Term Care insurance, you should definitely look into the options.

FHA to make reverse mortgage less forgiving for seniors late on taxes

Posted on June 23, 2010 by Jason

The Washington Post, June 19th, 2010

Here’s a sobering message for anyone who has a federally insured reverse
mortgage or plans to apply for one: If you don’t pay your local
property taxes or hazard-insurance premiums, the risk of losing your
house to foreclosure is about to increase.

Although the Federal Housing Administration, which runs the dominant
reverse-mortgage program, often has been lenient and forgiving in the
past about tax and insurance delinquencies by seniors, the agency is
likely to take a more disciplined approach in new guidelines due this
summer.

The FHA is essentially under the budgetary gun to do so: Its
reverse-mortgage program ran into a $798 million estimated budget
shortfall in the last fiscal year — its first loss ever — in part
because of widespread declines in the value of homes that secure its
insured loans. It has cut maximum borrowing amounts available to seniors
by 10 percent already and is looking for other ways to bring the
program back into profitability in an era of low home-appreciation
rates. The agency has asked Congress for a $250 million subsidy, but so
far it has not been funded.

Fannie Mae, the District-based mortgage giant, also has begun
instructing the companies who service its large portfolio of FHA reverse
mortgages to toughen up on tax and insurance delinquencies, saying they
should move toward starting foreclosure proceedings when borrowers have
not paid their bills for extended periods and expose the company to
losses.

Read more of this article.

Consider a Part-Time Retirement Abroad

Posted on June 22, 2010 by Jason

US News & World Report, June 18th, 2010

There are plenty of drawbacks to permanently exiting the United
States in retirement. Selling everything you own, packing your bags, and
leaving your home, your family, and your friends may seem bold,
intimidating, even ridiculous.

Perhaps you don’t want to sell your house or be a plane ride away
from your grandchildren all year long. Your business or family
responsibilities in the United States could make it inconvenient to
reside overseas, at least 12 months a year. Some retirees just
want to escape winter. They’re not looking to leave home, only to avoid
shoveling the driveway or scraping ice off the windshield four or five
months every season.

These are all good reasons to consider retiring overseas part-time.
Another is budget. If your retirement nest
egg has taken a beating recently, your prospects for retirement living
in the United States may seem grim right now. On the other hand, if you
spend half the year some place where the cost of living is significantly
reduced and rent out your U.S. home while you’re away, your retirement
funds could expand accordingly. Retirement could go from a source of
concern to a cause for excitement.

This snowbird approach to retirement isn’t new. Retirees from upstate
New York and the Dakotas have been migrating south for decades. The
difference today is that they’re migrating farther south. Panama has
become the new Florida — the top choice among Americans looking to
escape winter back home by spending that season in far sunnier climes.
Top snowbird destinations today also include Mexico, Nicaragua, and
Belize. Other good part-time retirement
havens are Argentina and Uruguay, where the seasons are the reverse of
those in North America. These aren’t tropical getaways but offer more
cosmopolitan wintertime escape options.

It makes sense to retire part-time in places where establishing
full-time residency is a hassle or perhaps impossible. You’ll have your
work cut out for you trying to organize full-time legal residency as a
retiree in Croatia or Thailand, for example. Many foreigners remain
indefinitely in Thailand without formalizing their stays, making regular
visa runs every few months to refresh their tourist papers. I don’t
recommend this, of course. It’s easier and safer simply to limit your
visit so that you don’t overstay your tourist visa.

Read more of this article.

Want To Leave Money To Your Family? Stretch Your IRA

Posted on June 22, 2010 by Jason

San Francisco Chronicle, June 22nd, 2010

When looking into retirement investing options, you may have come across
the term ‘stretch IRA‘.
This is actually not a category of IRA, such as a Traditional,
Roth, SEP or SIMPLE IRA; instead,
it is more like a financial-planning or wealth-management concept that
acts as a provision of the IRAs many financial institutions offer. A
financial institution may not refer to their IRA product by this
specific term, so when discussing these IRAs, it may make sense to
describe the concept.

The stretch provision is one you might be
interested in if you are using your IRA primarily to provide for your
beneficiaries. In this article, we’ll discuss the stretch concept and
the factors that determine whether an IRA includes a stretch provision.

The
Stretch Concept
While the basic intent of having a
retirement account is to save for and finance retirement years, many
individuals have other financial resources and prefer to leave the
tax-deferred (or tax-free, in the case of a Roth IRA) assets to their beneficiaries.
Whether the beneficiaries can continue to enjoy tax-deferred or
tax-free growth on the retirement assets, however, depends on the
provisions stated in the IRA plan document.

Some IRA provisions
may require the beneficiary to distribute the assets soon after the IRA
owner’s death. Some will allow the beneficiary to take distributions
over his or her life expectancy
as provided by the Internal Revenue Code.

Others will allow
the beneficiary to distribute the assets over a life-expectancy period
and also allow him or her to designate a second-generation beneficiary
of the inherited IRA. This provision allowing a beneficiary to designate
a second-generation beneficiary (and even a third, fourth and so on) is
the one that determines whether the IRA has the stretch provision – it
allows the IRA to be stretched (passed on) from generation to
generation, if life expectancy allows for it.

Read more of this article.

Retirement Accounts:  Saving for retirement is difficult.  Consider the options available to you in terms of retirement accounts with the information at NewRetirement.com

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