Archive for October, 2010

The Next Public Health Crisis: Longevity

Posted on October 28, 2010 by Jason

The New York Times, October 21st, 2010

Since her appointment as dean of the Mailman School of Public Health at Columbia University
in 2008, Dr. Linda P. Fried, a geriatrician, has sought to make the
dramatic aging of the world’s population, and its myriad ramifications,
one of the pillars of education for the 1,100 graduate students there.

Since 1900, life expectancy for the average American has increased by
three decades, creating a host of medical, financial and public policy
challenges. Just as the school took on AIDS in the 1980s and emergency
preparedness in the wake of 9/11, so it is now scrambling to prepare its
students to turn this age wave from a public health emergency to an
opportunity.

Rigorous exploration of the subject is now high on the school’s
agenda. A study by Mailman researchers, released early this month,
explored the causes of the lag in life expectancy in the United States,
compared with more than a dozen other countries. To the researchers’
surprise, the likely suspects — obesity, smoking, traffic accidents and
homicide — were not to blame for the disparity.

Instead, the researchers concluded that “costly specialized and
fragmented care,’’ hallmarks of American medicine, are probably to blame
— despite a per capita increase in health care spending here that was
twice the rate of other countries. “It was shocking to see the U.S.
falling behind other countries even as costs soared ahead of them,” said
the lead author, Dr. Peter Muennig, assistant professor of health
policy and management at the Mailman School of Public Health.

Days before Dr. Muennig’s study was released, I attended a memorial
service for Dr. Robert N. Butler at All Souls Unitarian Church on
Manhattan’s East Side. Dr. Butler, who died suddenly in July of acute leukemia at the age of 83, all but invented geriatrics as we know it: he was founding director of the National Institute on Aging and created the first full-fledged geriatrics department at an American medical school, the Mount Sinai School of Medicine. Today, 11 of 145 medical schools in America have such departments.

More than any other physician and researcher, Dr. Butler was
responsible for turning aging into a discipline unto itself, not an
afterthought of various medical specialties. And so I was intrigued to
hear at his memorial service that the International Longevity Center
— a think tank run by Dr. Butler that produces reams of research on old
age, longevity and caregiving — would move to Columbia University and
begin a formal collaboration with the Mailman School of Public Health.

Read more of this article.

Retirement Calculator:  How big of a risk is Longevity to you?  How well are your finances prepared to deal with the prospect of you living past your life expectancy?  A retirement calculator can help you determine just that.  Consider your options at NewRetirement.com

When Hormone Creams Expose Others to Risks

Posted on October 28, 2010 by Jason

The New York Times, October 25th, 2010

Veterinarians around the country are reporting a strange phenomenon:
spayed dogs and cats, even some puppies and kittens, are suddenly
becoming hormonal.

In female pets, the symptoms resemble heat: swollen genitals, bloody
discharge and behavioral problems. Male animals are showing up with
swollen breast tissue and hair loss. Standard treatments and even repeated operations have had no effect.

Now vets have identified the culprit. The pets were all owned by women who used hormone creams on their hands, arms and legs to counter symptoms of menopause.
Animals who licked or cuddled their owners, or rubbed up against their
legs, were being inadvertently exposed to doses of hormone drugs.

These anecdotal reports, about 20 of which were first collected by the Veterinary Information Network,
a news service for veterinarians, suggest that many women are not
taking proper precautions when using topical hormone products — putting
not only pets but also family members at risk for hormone exposure.

“The dogs are licking and rubbing the treated area and absorbing the
drug, which is putting them back into heat,” said Dr. Terry Clekis, a
veterinarian in Bradenton, Fla. Dr. Clekis has seen about five cases of
pet exposure to menopause creams, including a dog that appeared to go
into heat about six months after being spayed.

Dr. Clekis feared he had left remnants of ovarian tissue behind after
the spaying. So he repeated it, but found nothing. It was his wife,
chatting with the pet owner, who discovered she was using a hormone
cream. Once the owner took precautions against exposing her pet, the
symptoms disappeared.

The Food and Drug Administration issued a warning in the summer after eight children exposed to the estrogen spray Evamist showed signs of premature puberty
like nipple swelling and enlarged breasts. The agency also received two
reports of dogs exposed to Evamist, and last year it issued another
warning after eight children were exposed to topical testosterone.

Read more of this article.

Failure to Annuitize Retirement Assets Increases Number of Households ‘At Risk’ by Nearly 10 Percent

Posted on October 28, 2010 by Jason

Forbes, October 26th, 2010

Though many households focus on accumulating assets for retirement, it
is equally important that they have a plan in place to help them get as
much as possible out of those assets during retirement. New analysis of
the National Retirement Risk Index (NRRI) by the Center for Retirement
Research at Boston College, and sponsored by Nationwide Mutual Insurance
Company, shows the percent of households ‘at risk’ for retirement jumps
from 51 to 60 percent when they live off of the interest from their
assets instead of purchasing an inflation-indexed annuity to provide a
guaranteed stream of retirement income.

The NRRI measures the share of American households ‘at risk’ of being
unable to maintain their pre-retirement standard of living in
retirement. The Index uses the conservative assumptions that people work
to age 65, receive income from reverse mortgages on their homes and
annuitize all of their financial assets. The new fact sheet examined
what would happen if households did not purchase an annuity to provide
lifelong income.

“It’s critical for today’s workers to not only invest for retirement but
to also have a plan in place to manage their assets once they retire,”
said Center Director Alicia H. Munnell. “Purchasing an annuity is one
way that households can ensure that they don’t outlive their assets but
the reality is that most people do not choose this option. We decided to
explore what impact removing the annuitization assumption would have on
the retirement outlook of American households in the Index.”

The full report is available at the Center
for Retirement Research at Boston College.

The study examined two alternative scenarios to annuitization. The first
alternative was that households drew down their assets at a rate of four
percent per year, a common strategy suggested by financial planners and investment
professionals. The second scenario examined what would happen if
households lived off the interest on their accumulated wealth (estimated
at 1.9 percent annually).

Read more of this article

Annuity Advice for Retirement:  Annuitization is a complex issue, and not everyone recommends it.  But if you want to take full advantage of your retirement, then it’s best to know what your options are with it.  Calculate your potential annuity at NewRetirement.com

Long-term care costs rising

Posted on October 27, 2010 by Jason

Bankrate, October 26th, 2010

The cost of nursing home, assisted living and adult day care costs
all rose in 2010 from 2009, according to MetLife Mature Market
Institute’s annual survey, released today. The numbers here are enough
to send most people’s retirement planning into a tailspin.

Key findings include:

  • The national average daily rate for a private room in a nursing home
    is $229 or $83,585 annually, while a semi-private room is $205 or
    $74,825 annually, up from $219 and $198 respectively in 2009. The lowest
    rates are in Louisiana and Texas; the highest rates are in Alaska,
    where it costs $687 for a private room and $610 for a semi-private room.
  • The national average monthly base rate in an assisted living
    community rose from $3,131 in 2009 to $3,293 or $39,516 annually in
    2010.
  • Staying at home and having someone care for you continued to be the
    most cost-effective approach. The national average hourly rate for home
    health aides is $21, while homemakers average $19. The daily rate for
    adult day services was $67. All of these rates were unchanged from 2009.

According to the U.S. Census Bureau, in 2009, 68 percent of
nursing-home residents were women. The median age of residents was 83
years, with only 16 percent younger than 65. The average length of their
stay was 2.4 years. If you multiply the average cost by the average
length of stay, you get $173,448 — more money than most people can spend.

If you’re healthier, you might opt for an assisted-living residence.
MetLife calculates that nearly 1 million people live in approximately
39,500 assisted living facilities in the U.S.  The average age of an
assisted-living resident is 86.9 years old, and the median length of
stay in assisted living is also 2.4 years. The average cost multiplied
by the average length of stay is a more reasonable $94,838.

The cost of hiring a home health care aide to provide 24-hour care
rivals the cost of a nursing home at $504 per day. Multiplied by the
2.4-year average need, that’s $441,504, a staggering amount of money.
But, of course, many people figure out how to get by with much less.

Read more of this article.

Long Term Care Insurance:  With Long Term Care costs increasing, insurance to cover you against the spiraling costs is a must-have.  Consider what options you have given your age, health, and price range, and ensure that your retirement isn’t derailed by massive long term care costs.

BMO Retirement Institute: The Retirement Numbers Game

Posted on October 27, 2010 by Jason

Marketwatch.com, October 27th, 2010

The BMO Retirement Institute announced today the release of its
latest report, When to Retire: Age Matters!, which advises that
Canadians approaching retirement should do their research before
choosing a retirement start date. The report contains important facts
that demonstrate how retirement start dates can impact not only the
various sources of income that will fund their retirement lifestyle,
but also how much personal savings they need to have accumulated.

One of the biggest factors outlined in the report are the upcoming
changes to the Canada Pension Plan (CPP), which were implemented to
create equity under actuarial assumptions between individuals who
retire at different ages. Under the current rules, drawing CPP
benefits prior to the age of 65 reduces monthly payments by 0.5 per
cent per month. Conversely, pensions are increased by 0.5 per cent
for every month one defers drawing on their payments past age 65. The
CPP changes, which will be fully implemented by 2016, could
significantly impact when one chooses to retire, providing a bigger
incentive for those who choose to wait.

For example:

--  The annual payment for a full CPP will be about $4,000 less if one    decides to start collecting at age 60, and about $4,600 more if one    decides to wait until age 70--  At age 90, the person who begins drawing CPP at age 70 will collect    about $100,000 more from the CPP than the early retiree who begins    collecting CPP at age 60

“The upcoming changes to CPP are just one example of why Canadians need
to educate themselves on their retirement options,” says Tina Di
Vito, Head of the BMO Retirement Institute. “In order for Canadians
to start thinking about their retirement start date, they need to
have a clear financial picture, be able to envision their goals and
have a plan for the future. The best way to do this is to seek the
advice of an experienced financial professional.”

Read more of this article.

Retirement Calculator:  What’s the best way to educate yourself about your retirement options?  Start with where you are, and decide how to build from there.  Our Retirement calculator can help you do just that.

What to Do Now to Feel Better at 100

Posted on October 27, 2010 by Jason

The New York Times, October 25th, 2010

Many changes take place in physical abilities as we age. Try as I may, I
simply can’t swim as fast at 69 as I did at 39, 49 or even 59. Nor am I
as steady on my feet. I can only assume my strength has waned as well —
I’m finding bottles and jars harder to open and heavy packages harder
to lift and carry.

But in August, I hiked in the Grand Canyon, prompting my 10-year-old
grandson Stefan to ask, “Grandma, how many 69-year-olds do you think
could do this?”

The answer, of course, is “a lot.” And the reason is that we work at it.
For my part, I exercise daily, walking three miles or biking 10, then
swimming three-quarters of a mile. In spring and summer, heavy-duty
gardening strengthens my entire body.

But now that my physically stronger spouse is gone, I see that I need to
make some improvements. With no one handy to open those jars or lift
those heavy objects, I’ve begun strength training so I can remain as
independent as possible as long as possible.

In a newly published book, “Treat Me, Not My Age”(Viking),
Dr. Mark Lachs, director of geriatrics at the NewYork-Presbyterian
Healthcare System, discusses two major influences (among others) on how
well older people are able to function.

Read more of this article.

‘Retirewent’ …and how to get it back.

Posted on October 26, 2010 by Jason

Advisor One, October 26th, 2010

Editor’s Note:  This article is designed for retirement advisers rather than retirees, but at NewRetirement, we feel that too much information is better than too little.

It’s a dynamic and distinct discipline, yet retirement income planning
continues to mystify many financial advisors, who are relying on classic
investment advice to solve issues that require new thinking.

As François Gadenne, executive director of the Retirement Income
Industry Association, frames it: “The difficulty with the retirement
income issue is that we’re like the plumber showing up for an electrical
job. One job deals with the flow of water, the other the flow of
electrons. I think we all know that if you take plumbing tools,
especially if they’re wet, to an electrical job, you’re not going to
like the results.”

The analogy pinpoints the crux of the challenge facing the retirement
income planning community today: How does the forward-thinking advisor
prepare clients for retirement when so many of yesterday’s rules no
longer apply?

“Retirement income planning is not just accumulation planning in
reverse. It requires different tools, techniques and skills,” according
to Howard Schneider, president of the consulting firm Practical
Perspectives and co-author of the 110-page report,The Continued Evolution of Retirement Income Delivery: An Analysis of Leading Practices in Advisor Support.

Far more than investment management, Schneider says, retirement income
planning involves a broader focus, a more pervasive risk and a different
mindset. “Investment management is not the be-all, end-all in terms of
helping someone prepare for retirement,” he adds. “The reality is that
once you’re in retirement, almost every decision you make — whether it’s
financial or not — has a financial impact. The state of your health,
where you’re going to live, whether you work part-time — all those
things have a financial implication in retirement. And it all circles
back to this: Do you have enough resources to get it done?”

Disappearing pensions, the threat to Social Security, and the increase
in life spans have been talking points in the retirement income planning
debate for years. No news there. But the damage inflicted by the
recession to investor wealth has served as an ugly reality check that
has elevated the conversation to another level, according to Gregory
Salsbury, executive vice president of Jackson National Life Distributors
and author of Retirementology: Rethinking the American Dream in a New Economy.

“Retirewent,” Salsbury calls it. “Investors have seen the black swan.
They have been fundamentally and emotionally changed by what’s unfolded
the last two years. Lots has changed: expectations, legacy planning, how
much to gift, how much to contribute charitably. Guarantees are no
longer nice to have, they are a must-have. An advisor’s best effort is
no longer good enough. I don’t want a pretty good chance of having
enough retirement income for the rest of my life. I want a guarantee,”
says Salsbury. “The best advisors aren’t going to go back to standard
asset accumulation and planning strategies. They simply can’t.”

What are the major issues facing advisors in the retirement income
planning space today? Here’s our checklist, with expert commentary from
some of the industry’s top thinkers.

Read more of this article.

Retirement Calculator:  Not all of us can afford retirement advisors, and must therefore become our own advisors.  The best place to start, even if you couldn’t understand the majority of the above, is by figuring what your overall situation is.  Our Retirement Calculator can help you do just that.

5 Reasons to Avoid Annuities

Posted on October 26, 2010 by Jason

US News & World Report, October 26th, 2010

Annuities have become more popular as investors continue to look for
guaranteed returns. Salesmen will try to convince people that they need
variable annuities,
with a pitch that sounds like “if the market goes up, you will
participate; if it goes down, you won’t lose any money.” Here are a few
things to know about annuities that many salesmen probably won’t
explain to you.

1. You might pay a lot more in taxes. One selling
point for variable annuities is that the growth in their value is
tax-deferred. But when you withdraw money from an annuity, the gains
are taxed as ordinary income, which could run as high as 35 percent at
the federal level. However, when you own a mutual fund, as long as you
hold it for a year and it rises in value, you will pay a maximum
long-term capital gains tax of 15 percent when you sell. So when you
buy an annuity, you could end up paying more than twice as much in
taxes on the exact same amount of gains.

2. The income guarantees may not be as good as you think.
It’s understandable that investors would be lured by a 3 percent
guaranteed return that some variable annuities seem to offer,
especially in an uncertain or down market. Another gimmick is teaser
rates, which may be an 8 percent or 9 percent return for the first
year. After that, the return rate goes to the “market rate,” which is
set by the insurance company and shouldn’t go below the guaranteed rate
of 3 percent. So for a 10-year annuity, you’d get 9 percent in the
first year and 3 percent annually for the next nine years. You might as
well stash your cash in a savings account.
Insurance companies don’t pay out more money than they receive in
fees, so these billion-dollar firms wouldn’t sell a product unless they
could make money from them.

3. Fees and expenses are often two to three times higher than mutual funds.
Annuities are insurance products sold by salesman looking for
commissions, which typically range from 7 percent to 10 percent. In
addition to the sales commission, insurance companies slap on another
layer of annual fees—usually 1.5 percent to 3.5 percent—so you’re
paying more for the same type of investments that can be bought outside
of the annuity. Given that annuities are long-term investments, the
fees add up over time and lower your returns.

Read more of this article

Annuity Advice for Retirement:  A lot of companies and advisers have begun recommending annuities to their clients as a cure for their retirement ills.  We’ve reported on some of those arguments in this very blog.  But as always, we do not offer advice ourselves, just the facts on whether the program will work for you.  Find out more at NewRetirement.com

When the Family Needs an Umpire

Posted on October 26, 2010 by Jason

The New York Times, October 25th, 2010

The home care aide didn’t expect her new charge to be particularly
cantankerous. After all, she had worked for the elderly woman’s sister
for four years, and they’d gotten along well.

But the new relationship was rocky from the start. More than once the
aide received confusing calls from the 88-year-old woman late at night.
She traveled to the woman’s apartment on the Upper West Side, only to
be met with a curt “What’s going on? Why are you here?” The older woman,
bedridden and recovering from a broken hip, repeatedly told the
caregiver to leave because she didn’t need help.

Frustrated and angry, the aide threatened to quit. That’s when the patient’s family called in Joy Rosenthal, an elder mediator.

Ms. Rosenthal and a co-mediator umpired the conflict at the older
woman’s bedside. “She was just frustrated with her condition, angry
about being so debilitated,” Ms. Rosenthal said. “She felt locked in and
was taking it out on the caregiver.”

Over the course of a daylong session, Ms. Rosenthal encouraged the two women to listen to each other.

“We talked to them, each in front of the other, about what they felt
the problem was, what they felt would make it better,” Ms. Rosenthal
said. Then the mediators helped brainstorm solutions, like installing a
big glow-in-the-dark clock in front of the client’s bed so she would
know not to call too late.

While lawyers and mediators have practiced elder mediation for years,
only recently has the practice garnered recognition as a specialty
separate from, say, family mediation. The mediator acts as a neutral
third party, helping families and caregivers — and sometimes even
medical providers and estate lawyers — make unified decisions about
elder care.

Read more of this article.

Living Abroad: What Do You Know?

Posted on October 25, 2010 by Jason

The Wall Street Journal, October 25th, 2010

What’s it like to retire overseas? Beryl Gorbman, a Seattle resident who
settled in Mérida, Mexico, shares her experiences on page 9 as part of a
new series in Next: first-person accounts of life as an expatriate.

Ms. Gorbman’s narrative reminded us that some of the things we take
for granted in later life—the arrival each month of a Social Security
check, for instance—become more complicated if you leave the U.S.
behind. This quiz should give you a better idea about how some of these
differences play out.

—Glenn Ruffenach

1. Medicare covers health care and supplies outside the U.S.:

A. For all beneficiaries

B. In selected emergencies

C. For all emergencies

D. For those who pay an additional premium

Answer: B. With three limited
exceptions (primarily involving emergencies close to U.S. borders),
Medicare doesn’t pay for treatment outside the U.S. In most cases,
Americans living overseas take three steps when it comes to health care,
according to Barry Golson, author of “Retirement Without Borders”: sign
up with a country’s national health-care service, if it accepts
foreigners; supplement such service with private insurance; and pay any
remaining bills out-of-pocket.

One note: Some Medicare Advantage and so-called Medigap plans pay a
portion of charges for emergency care outside the U.S. Check with your
plan’s provider.

2. True or False: The Social Security Administration will mail benefit checks to U.S. citizens living overseas.

Answer: True—with a few exceptions.

Social Security can’t send payments to Cambodia, Cuba, North Korea,
Vietnam and many of the former Soviet republics. So, if you’re thinking
of retiring in Havana, you’ll need to make other arrangements.
Otherwise, if you’re a U.S. citizen, you can travel or live overseas
without affecting your eligibility for Social Security benefits.

One cautionary note: Periodically, the Social Security Administration
sends questionnaires to beneficiaries living outside the U.S. to
determine if such individuals are still eligible for payments. If you
fail to return the form, payments will stop.

Read more of this article.

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