Archive for November, 2010

AARP Calls for Withdrawal of Fed’s TILA Proposal Due to Reverse Mortgage Revisions

Posted on November 30, 2010 by Jason

The New York Times, November 29th, 2010

AARP is requesting the Federal Reserve withdraw a proposal and defer
changes to the Truth In Lending Act (TILA) until next year due to
revisions relating to reverse mortgages and the right of rescission.

“Not only would those two provisions greatly undermine existing
consumer protections, they break with Congressional intent and exceed
the authority given to the Board,” said David Certner, AARP Legislative
Policy Director in a comment letter.

Earlier this year, the Fed proposed enhanced consumer protection
and disclosure requirements for reverse mortgages that prohibit lenders
from requiring the purchase of another financial or insurance product
as a condition of obtaining the loan.

“Unfortunately, this prohibition includes a safe harbor provision
that deems transactions to be in compliance if the purchase of such
financial products occurs at least 10 calendar days after the reverse
mortgage transaction has been completed. Allowing for such an exception
essentially nullifies this important prohibition,” said Certner.

According to the letter, the safe harbor proposal also appears to be
“contrary to the intent of provisions of the Dodd–Frank Wall Street
Reform and Consumer Protection Act.”  As part of the law, the Consumer
Financial Protection Bureau (CFPB) is required to conduct a study of
reverse mortgages within one year of being established.

The agency can also issue regulations as necessary for “protecting
borrowers with respect to obtaining reverse mortgage loans for the
purpose of funding investments, annuities, and other investment products
and the suitability of a borrower in obtaining a reverse mortgage for
such purpose.”

Read more of this article.

About Reverse Mortgages:  AARP has, for a long time, supported the expansion of the various reverse mortgage programs offered by HUD, and their concern reflects a worry that reverse mortgages may become more difficult to get.  Consider whether or not a reverse mortgage is right for you at NewRetirement.com.

Ask an Elder Law Attorney: Medicaid and the Primary Residence

Posted on November 30, 2010 by Jason
The New York Times, November 24th, 2010

Q.

I’ve been told that if we put our mother in a nursing home, we
must first spend down all her assets before Medicaid will kick in. But
her major asset is her house. In this economy, with houses not selling,
how will that work? Does Medicaid put a lien on the house and get
reimbursed after it sells?

Also, my sister currently lives in the house. Is she allowed to continue living there until the house sells?

— Lynn

A.

In most states, a house that is a person’s primary residence is
exempt for purposes of Medicaid eligibility — even if the recipient then
moves to a nursing home. (Remember, Medicaid is a federal-state
program, so its rules vary by state.)

But there are two other conditions for exemption. The net value of
the house can’t exceed $500,000. (States have an option to increase
that to $750,000, but only a few have done so.) And the owner needs to
sign a form stating her intent to return to the house, even if that
seems an unlikely prospect and she remains in a nursing home.

In addition, any real estate, including the primary residence, is
exempt if you are legitimately trying to sell it and no one will buy it.

Even if the house is exempt, it may not make much sense to try to
hold on to it. Once the owner is on Medicaid, she will not have enough
income to pay the taxes, insurance and upkeep.

There isn’t much incentive for children or others to pay those
expenses, either, because when the owner dies, Medicaid will want to be
reimbursed. That usually happens by using the proceeds from the sale
of the house. And yes, many states do put a lien on a house when the
owner becomes eligible for Medicaid. This protects the state’s ability
to get reimbursed when the house sells.

Your sister could live in your mother’s house until it sells. But
there may be an even better option. If your sister were to live in your
mother’s house and to care for her for at least two years, and if
because of this care your mother were able to remain in her home rather
than enter a nursing home, then your mother could give your sister the
house without any Medicaid penalty or disqualification.

Read more of this article.

The Graying Work Force

Posted on November 30, 2010 by Jason

The New York Times, November 30th, 2010

My 73-year-old father is retired, sort of. He works as a greeter in a
grocery store in Calgary, Alberta, juggling shifts at work with caring
for my young niece, who stays with my parents after school until my
sister finishes work. You’ve likely seen someone like him in action — an
elderly man or woman who says hello when you walk in, steers you to the
right aisle and wishes you good day on your way out.

My dad, who puts in about 20 hours a week, stands on his feet for
hours and sometimes works late shifts until midnight. Every now and
then, he deals with shoplifters trying to sneak past his post. And yet
he says this is the best job he’s ever had.

Until recently, working after retirement sounded like an oxymoron.
Aren’t those years supposed to be devoted to volunteering, traveling and
visiting grandchildren? But a recent report by the Families and Work
Institute and Boston College’s Sloan Center on Aging and Work found that
a growing number of people continue to work for pay following their official “retirements.” And while they may be motivated by money, many like my father are finding their late-life jobs unexpectedly fulfilling.

Older workers “expect they have to, and they want to, extend their
labor force participation,” said Marcie Pitt-Catsouphes, director of the
center and the study’s co-author. In fact, 75 percent of the
participants over age 50 in the center’s study said they expect to have
jobs after they “retire.” Already, roughly a quarter of older workers
switch occupations after age 50, according to Richard Johnson, a senior
fellow at the Urban Institute in Washington, D.C.

The federal Department of Labor estimates that between 2006 and 2016, the number of workers over age 55 will rise 36.5 percent. That increase will create the grayest labor force since the government began tracking this data, Mr. Johnson said.

Read more of this article.

Working in retirement:  More and more people are doing it.  Some for money, some for the challenge and stimulation, some simply from a sense of having purpose.  Consider whether a job in retirement is the right move for you.

8 popular jobs for retirees

Posted on November 29, 2010 by Jason

MSNBC, November 28th, 2010

A growing trend shows that many Americans are taking on new jobs
after their “official” retirement. For the most part, it’s because they
need the extra cash — but some retirees are simply bored. Whatever the
reason, an increasing number of seniors are clocking in and bringing
home the bacon for many years after retirement.

According to the U.S. Department of Labor, the number of employed
Americans between the ages of 65 and 90 has mushroomed in recent years.
As a matter of fact, 6.4 percent of Americans aged 75 or older (more
than one million seniors) were still working in 2006. That was up from
4.7 percent just 10 years earlier.

So, what exactly are these retirees doing to earn some extra income? Here are eight of the most popular post-retirement jobs.

1. Consultant

If you were an expert in your field during your working
years, why not sell that expertise to other companies after you retire?
As countless retirees
are realizing that their hard-earned skills and knowledge are highly
marketable, many of them are jumping into the consulting business.

For example, let’s say you are the most practiced marketing guru in
your company. After you retire, you could offer your marketing services
to other businesses — or even your old company. And here’s the real
kicker: as a part-time consultant, you can charge hourly rates and earn
as much or even more than you made when you worked full-time. Plus, as
your own boss, you can pick and choose which projects you want to
tackle.

2. Caterer

After inhaling your scrumptious homemade lasagna and
savoring your mouthwatering caramel apple pie, do family and friends
often say things like, “This is delicious … you could sell this!” If so,
catering may be the ideal post-retirement career path for you.

Many retirees who are whizzes in the kitchen are starting their own
catering businesses. It gives them the opportunity to turn their
favorite pastime into a profitable business venture.

Let’s say your 6-year-old granddaughter has more business smarts in
her little finger than you do in your entire body. No problem. You don’t
have to start your own catering business to earn some extra dough. You
can always offer
your valuable services to other local catering companies. That way, you
can cook and bake until your heart’s content without having to deal
with the accounting and marketing headaches a business owner must face.

Read more of this article.

Working in Retirement:  Even if these choices aren’t for you, or you’re just looking for a little volunteer work to pass the time, working in retirement is often of great benefit, both financially and in other aspects of life.  Consider what options are available in your area at NewRetirement.com.

Think Twice Before Signing Up for That Medical Credit Card

Posted on November 29, 2010 by Jason

The New York Times, November 26, 2010

IF you are like most people, you have probably used a credit card to pay
some of your medical bills. With rising health costs and gaps in insurance coverage, it’s almost unavoidable.

Patients pay about $45 billion worth of health care costs with plastic, according to a report from McKinsey & Company.
By 2015, that number could more than triple to an estimated $150
billion. And big finance companies and medical providers have taken
note.

Companies like GE Money, Citibank and JPMorgan Chase
have issued medical credit cards or lines of credit intended to be used
specifically for elective health care expenses not covered by
insurance, including certain dental procedures, Lasik surgery, some cosmetic surgery and even veterinary care. The cards are not used for continuing medical care or emergency room visits.

The issuers market these cards not so much to consumers but to doctors,
dentists and other health care providers, who in turn offer them to
patients as a payment option. Patients like medical credit cards because
payments for care can be spread out over many months and the cards can
be used at multiple providers. The providers have embraced them as a way
of offloading billing headaches and expenses.

But even as medical credit cards become increasingly popular, they are
getting more scrutiny — not much of it flattering. Critics and patient
advocates claim that aggressive and misleading marketing tactics can
lead to serious headaches for consumers.

In extreme cases, medical providers and associations marketing the cards
have been accused of receiving financial incentives for signing up
patients or of falsifying financial information to make it easier for
patients to qualify for cards.

More commonly, critics say, patients may be led to assume that their
providers are simply offering payment plans, not a credit card with all
the potential fees, interest rate increases and the impact on credit scores that can entail.

“Ironically, these cards may be best suited to people who already have
financial resources,” said Mark Rukavina, executive director of the
Access Project, a consumer advocacy group in Boston, and co-author of a
study on medical debt. “But it’s usually people with limited resources
who sign up.”

Consumer complaints concerning aggressive marketing tactics prompted the New York attorney general, Andrew M. Cuomo,
to start an investigation into medical credit cards earlier this year.
In Minnesota, the state attorney general, Lori Swanson, has filed
lawsuits against two chiropractors whose staff is accused of signing up
patients for medical credit cards without their knowledge.

A medical credit card is “one payment option among several a provider
may offer and represents a very small component of health care financing
for elective procedures,” said Stephen White, a spokesman for
CareCredit, a medical credit card issued by GE Money. “Benefits to
consumers include the ability to plan, budget and pay for certain
elective health care procedures over time.”

Whether you view these cards as a convenient way to pay medical expenses
or just another way for credit card companies to collect interest and
fees, here are some things to consider if your provider approaches you.

ASK FOR ALTERNATIVES First, try to negotiate a lower
fee with your provider; he may be more flexible than you think. Then ask
about payment options. Your doctor may well offer a payment plan of his
or her own, without the high interest rates often charged by a medical
credit card company.

“I encourage people to negotiate with their provider, then get an
extended payment plan directly from that office with a monthly payment
and time period you are comfortable with,” said Mr. Rukavina. “I think
most providers are willing to work for patients in this way.”

Read more of this article.

Supplemental Medicare Insurance:  The enormous (and rising) cost of health care can be absorbed in more ways than just credit cards, which in all circumstances, are generally among the most dangerous forms of debt for your retirement.  Consider if perhaps an insurance program fits your needs for less cost that you would otherwise incur, at NewRetirement.com.

Retiring right where you are

Posted on November 29, 2010 by Jason

Reuters, November 18th, 2010

Most
boomers say they don’t want to retire and move to Florida or Arizona or
even Belize. They want to stay where they are, near family and friends
and in the home that they already know and love.

That may not work out for the
whole generation: Their kids might move away, or the expensive suburban
neighborhoods that served them well when they were working might prove
too taxing once they start cashing in their 401(k) accounts. Some may
change their plans. But anyone giving serious thought to retiring – and
ultimately aging – in place, can make that outcome more likely if they
start planning in advance.

“Don’t
just leave it to chance,” says Peter Bell, a reverse mortgage advocate
and also head of the National Aging In Place Council, a coalition of
businesses that sell to seniors. “Waiting until you’re in your 80s is a
mistake.”

So lay that groundwork now. You could always move later. Here are some pointers:

Draw
a line between retiring in place and aging in place. Early retirement
is a time of much activity; travel, hobbies and often, good health. You
may not need your home or your community to be very different during the
early stages of retirement, but by the time you hit your late 70s, you
may need an easier environment. Think about both early and late
retirement when you’re planning to stay put.

Get
your house in order. If you’re already remodeling, consider the kinds
of improvements, like wider hallways, first-floor bathrooms and walk-in
showers, that you’ll want when you’re older. The National Association of
Home Builders has a certification program for remodelers that
understand all of those enhancements. You can find one, and more
information about home remodeling, at (www.nahb.org/caps.)

Get
your neighborhood in order, too. Your town might have had a great
school system for the kids but you won’t love living there as an older
person unless it feels safe, has good sidewalks or easy walking paths,
good nearby health care and recreation centers and activities for older
people. It’s a bonus if you already have many friends there. Some
neighborhoods start out as kid-dominated places but turn into what’s
known in the business as “NORCs” or “naturally occurring retirement
communities.”

Read more of this article:

Retirement Calculator:  A viable retirement plan is required in order to “age in place” as the above article describes.  In order to ensure that yours is viable, you should consider running a retirement calculator, such as the one available on NewRetirement.com.

Late in Life, an Agonizing Choice Over Surgery

Posted on November 24, 2010 by Jason

The New York Times, November 15th, 2010

Editor’s Note:  This one’s got nothing to do with retirement finance, but is, in the opinion of this editor, an important story to read for anyone considering a medical procedure with major quality-of-life implications at advanced age.  We make no suggestions or recommendations, as these decisions are and must be intensely personal.

Forgoing a potentially life-saving medical procedure may be easier at
age 94 than age 54, but for my patient George Pollack it was a wrenching
decision anyway. Suffering from a severe foot ulcer that would not
heal, he was told his only chance of a cure was a partial amputation of
his leg. Even then, there were no guarantees.

George was a savvy medical customer. He had been a lawyer in New York
for more than 60 years — among other things, serving as executor for the
estate of Lou Gehrig’s widow, Eleanor, and making sure that any payments from the use of Gehrig’s image went toward A.L.S. research at Columbia University Medical Center. I originally met George when I was doing research on Lou Gehrig’s illness.

George was suffering from peripheral vascular disease,
or obstruction of the arteries that feed the limbs. Early on, it is
possible to reopen clogged blood vessels with a balloon. But when the
disease worsens, blood-starved areas, usually the feet, may develop
life-threatening ulcers.

By the time I met George, in 2002, he was already prone to ulcers — a result of flat feet and decades of poor circulation — and he required a complex combination of antibiotics,
ointments and dressings. I gave what advice I could, referring him to
an infectious-disease specialist who helped cure one of the largest
ulcers.

By April 2009, things were worse. George had a large ulcer that would
not heal on his left foot and was requiring hospitalizations and
intravenous antibiotics. One surgeon strongly advised a below-the-knee
amputation of the left leg.

George got a second opinion from Dr. Alan I. Benvenisty, a surgeon and
director of the vascular laboratory at St. Luke’s Hospital. In August,
hoping to try a balloon procedure, Dr. Benvenisty sent him for an angiogram,
a dye study that generates images of the arteries. But the test showed
that a balloon was out of the question. Amputation was the only surgical
option.

So Dr. Benvenisty did what any doctor should: he laid out the options,
pro and con. He told George that surgery was very risky and that the
wounds did not heal properly in roughly 30 percent of below-the-knee
amputations. A
study of 704 such operations, published in The Archives of Surgery in
2004, found that patients were at risk for “significant morbidity and
mortality.” In George’s case the odds were even longer: he was 94 and had suffered a mild heart attack during his angiogram.

And then there was rehabilitation. At the very least, George would require two taxing months of aggressive physical therapy in a nursing facility.

What was the other option? Without surgery, Dr. Benvenisty told George,
the vascular disease would probably kill him in a matter of months.

I was among the many people to whom George spoke. Part of him clearly
wanted to try surgery. After all, he told me, who does not want to live?

Read more of this article.

Income Security in Your 80s, Bought in Your 60s

Posted on November 24, 2010 by Jason

The New York Times, November 4th, 2010

WOULD you be willing to place a bet that you’ll live past the age of 80? What about 85?

A relatively new product, known as longevity insurance,
allows you to put money on those odds — and the longer you can beat
them, the more money you stand to collect. But the point isn’t about
making a ghoulish gamble. The insurance is a way to protect you from
running out of money should you live to a ripe old age, though it turns
your retirement years into something of a contest with the insurance company.

At its core, longevity insurance is simply a deferred annuity: you hand
over a pile of cash to an insurance company, usually around the time you
retire. But the guaranteed payments begin much later, usually around 80
or 85, and last for the rest of your life. As with homeowner’s policies
and other types of insurance, the idea is to give up a smaller amount
of money now, for a potentially larger payout later.

Though many retirees are loath to part with thousands of dollars for a
benefit they may never receive, some baby boomers may decide it’s worth
the gamble. Consider this: for a healthy 65-year-old couple, there is a
50 percent chance that at least one of them will live until 92,
according to the Society of Actuaries.

Even if you don’t live that long, the insurance removes some of the
uncertainty of how much you can afford to spend in retirement. If you
know you have a guaranteed stream of income that will kick in at age 85,
for instance, you may be able to spend down your portfolio a little
more aggressively before then. The idea is to buy enough insurance so
that you’ll be able to maintain your lifestyle after the payments begin.

Read more of this article.

Retirement Calculator:  Longevity Insurance is an exciting new product for healthy retirees, but how best to integrate it into an overall retirement plan?  Consider using our Retirement Calculator to get an idea of how to do just that.

5 ways to make retirement savings last

Posted on November 24, 2010 by Jason

Bankrate, November 24th, 2010

This is not your father’s retirement.

Chances
are, Dad left the company with a gold watch, a pension that included
health insurance and a Social Security check he could count on. His life
expectancy past retirement was fewer than 10 years — so those
resources weren’t stretched.

The picture will be
decidedly different for people who retire in the next 20 years — no
watches, no pensions or health insurance in most cases; a shaky Social
Security system; and a life expectancy of at least 20 more years.

Even
if you’ve planned carefully and your retirement nest egg is hefty,
there’s always a possibility that you’ll outlive — or outspend — your
money.

1. Buy longevity insurance 

The
concept isn’t new, but insurance companies have tweaked how these
single premium annuities pay out to provide nervous baby boomers with
additional cash just when they are likely to need it most.

You
give the insurance company a relatively small chunk of change at age
65. The insurance company invests it until you turn 80 or 85 and then
begins paying you monthly payments for the rest of your life. A typical
policy might cost $25,000 at age 65 and pay out $3,000 per month
beginning at age 85.

The money comes at a point in
life when you’re likely to start having hefty medical bills combined
with 20 years’ worth of inflation that may have diminished your
resources. This approach also makes long-term planning easier because
the payout is determined when you buy the policy. You can confidently
spend more of your other assets if you know they’ll be replenished at a
predetermined point.

The biggest drawback is that if the grim reaper comes early, you won’t get your money’s worth.

“It’s
really inexpensive,” says Ted Mathas, chief operating officer of New
York Life Insurance Co., “because half the people will never get there,
and if they do, they’ll only live three or four years beyond that
threshold. So the cost is a fraction of what it might be if they had to
manage these assets for 20 years. It provides great security in a
defined period of time.”

Read more of this article.

Retirement Calculator:  All of these are excellent suggestions, in the opinion of the NewRetirement Editorial staff at least, but integrating them into a coherent plan requires the use of a planning tool or calculator to get you started.  Consider the options at NewRetirement.com.

Do you need longevity insurance?

Posted on November 22, 2010 by Jason

Reuters, November 22nd, 2010

We insure our homes against the risk of theft and fire, and our cars
for the risk of an accident. But how about insuring ourselves for the
risk of living too long?

The odds are rising that more Americans will run out of money in old age.
Average longevity is rising dramatically at a time when many older
Americans are struggling with damaged retirement accounts, unemployment
and rising expenses for healthcare.

Meanwhile, Social Security
is on track to replace less pre-retirement income in the years ahead,
due to a higher full retirement age mandated back in 1983 and Medicare
Part B premiums; any further cuts implemented now as part of
deficit-cutting would erode Social Security’s value even further.

Earlier this year, the Employee Benefit Research Institute (EBRI)
reported that many American households in all income brackets won’t have
enough cash in retirement to meet expenses in retirement. EBRI’s 2010 Retirement Readiness Rating
study projected that almost one-third of Americans in the
second-highest income bracket will run out money after 10 to 20 years in
retirement. And, nearly two-thirds (64 percent) of Americans in the two
lowest pre-retirement income brackets will run short 10 years out.

Think longevity insurance sounds like a good idea? If so, you’re in
league with a handful of major insurance companies who have started
offering such policies in the past few years. Longevity insurance
policies are deferred income annuities that issue payments only when –
and if — you hit an advanced age. It’s a variation on the plain-vanilla
single premium immediate annuity (SPIA), wherein you fork over a chunk
of cash to an insurance company at retirement, in return for lifetime
checks that start immediately.

Longevity policies are much less expensive than SPIAs because of the
deferred benefit feature – the insurance company gets to invest your
money for a longer period, and if you don’t hit the target age you’ll
never collect. For example, Hartford Financial Services Group
quotes a joint and survivor longevity policy for a married 65-year-old
couple at $49,779, which would pay a $1,500 monthly benefit when they
reach age 85. That’s far less than the $314,913 it would charge that
same couple for an immediate annuity offering the same monthly payout.

Read more of this article.

« Older Entries
NewRetirement Blogs Home