Archive for December, 2010 Page 2 of 4

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Avoid taxes: Put your riskiest investments in your Roth IRA

Posted on December 23, 2010 by Jason

USA Today, December 23rd, 2010

Q: What kind of investments make sense for a Roth IRA?

A: You might think your individual retirement
accounts are a place to be financially conservative. But just the
opposite is true, at least when it comes to your Roth IRA. A Roth can be
a great place for your riskiest investments. I’ll explain why in a bit.

First, let me say if you don’t have a Roth IRA,
you should open one. Thanks to changes in the tax laws, if you couldn’t
have a Roth before, you may be able to now.

The rules regarding who can contribute to a Roth
are strict. And in the past, single and married taxpayers with modified
adjusted gross income of more than $100,000 couldn’t convert traditional
IRAs to a Roth. But that rule disappeared this year.

You can read more about who can fund a Roth or convert a traditional IRA to a Roth here: www.usatoday.com/money/perfi/retirement/2010-02-19-iraconversion19_CV_N.htm

OUTLOOK: Forecasters predict market gains in 2011
MORE: Ask Matt column index

But your question gets at something else. What kind of investments make the most sense in this unique retirement account?

To understand the answer, it’s critical to
understand the key advantage Roths have. With these retirement accounts,
you contribute money that’s already been taxed. You can then take out
your contribution and the earnings without paying additional taxes, if
you meet certain requirements.

Roth IRAs have a second big advantage: You’re not
required to take distributions when you reach 70 1/2, as is the case
with other retirement accounts.

Due to these two characteristics, Roth IRAs are
perfect candidates for your riskiest and most aggressive investments.
This might seem counterintuitive because you probably think you should
be safe with money that’s earmarked for retirement. And if your Roth is
your only retirement savings account, then that’s true, you’ll want it
to be a traditional diversified portfolio.

Read more of this article.

401k and IRA programs:  There are many different strategies and options concerning retirement accounts such as Roth IRAs that one should consider before making a decision as to how and where to invest.  Learn what the options and rules are at NewRetirement.com

Toil and Trouble

Posted on December 22, 2010 by Jason

The New York Times, December 22nd, 2010

When economists and policy types and members of Congress talk about older Americans working past normal retirement age, an increasing theme of late,
we tend to think they mean a few years beyond age 65, right? Working
until ages 68 or 69, that is — maybe even 70, though that might be
pushing it.

We know that the work force is graying, but except for outliers, your
Willie Nelsons or Robert Duvalls, most of us don’t picture people
staying on the job when they’re pushing 80. In fact, as readers were
quick to comment when Sherisse Pham recently wrote here about her 73-year-old father, a supermarket greeter, we see age discrimination as a potent barrier, even as we appreciate the continuing engagement that employment might bring.

Recently, while mulling this issue (count me among those who hope to
keep working), I was intrigued to hear from the ace data-crunchers at
AARP that in the past 20 years the oldest group of workers, the 75-plus
work force, has increased enormously. Seventy-five! And not only because
there are simply more people that age around, but also because a higher
percentage of them are participating in the labor force.

“There are some pretty striking changes going on,” said John Rother, AARP executive vice president for policy.

I’ll say. Sifting through the data from the Bureau of Labor
Statistics, AARP analysts found that the number of workers ages 75 and
older (meaning they’re employed or seeking employment) has grown to
about 1.3 million in 2009, from just under half a million in 1989.
That’s still a small sliver of the population over age 75, just 7.3
percent, but a big jump from the 1989 labor force participation rate of
4.3 percent.

We know that a growing proportion of this work force, almost 44
percent, are women. And a just-released Census Bureau report adds this
surprising fact: of workers ages 75 to 84, more than 42 percent hold
full-time jobs.

Moreover, hundreds of thousands of people over age 75 want to work
and can’t; their unemployment rate has shot up to 5.7 percent. But the
year-to-year federal figures show that to be largely a product of the
last two recessionary years; more typically, it hovers around 3 percent.

Read more of this article.

Working in Retirement:  Retirement jobs are their own special brand of challenge, as age discrimination and the need to cope with one’s advanced years makes working a different process.  Still, there are many fields and positions that cater specifically to seniors looking to supplement their incomes.  Find out more at NewRetirement.com

4 Reasons Why You Should Give Reverse Mortgages Another Look

Posted on December 22, 2010 by Jason

CBS Moneywatch, December 17th, 2010

If you’ve been snubbing a reverse mortgage, or counseling your
elderly parents against it, take another look. These notoriously
expensive loans are now on sale for less.

You’re right to be careful about the loans. If mis-sold, they can
leave you poor — and the press tells plenty of tales about mistakes. On
the other hand, the right loan at the right time can lift you out of a
pinched life of living on Social Security and measly certificates of
deposit.

Reverse mortgages are sold to people 62 and up. They’re a loan
against the equity in your house. You can take the tax-free money in a
lump sum or in gradual withdrawals from a credit line — giving you more
cash to spend to enhance your life. There’s no credit check and no
monthly payments are due. When your house is eventually sold, the loan,
plus accumulated interest, is repaid out of the proceeds. Anything left
over goes to you or your heirs. If the house sells for less than the
money owed, the Federal Housing Administration, which insures most loans
today, swallows the loss.

Here’s what today’s market for reverse mortgages looks like, and reasons why you should re-consider them:

1. Save money on costs. The standard reverse
mortgage is the Home Equity Conversion Loan or HECM. At full price, it’s
a heavy lift. You pay an origination fee that can rise to $6,000. Plus a
mortgage insurance fee, generally equal to 2 percent of the home’s
value. Plus assorted closing costs — title insurance, recording,
appraisal, and so on. Plus a fee for servicing the loan. We’re talking
$15,000 to $20,000 here, upfront. The costs are tucked into your loan,
so you’ll owe interest on the fees as well as the loan principal. Every
year, there’s another insurance fee, for 1.25 percent. The loan amount
grows over the years, because of the fees and the compounded interest
that accumulates.

Right now, however, many lenders are waiving some of these upfront fees. That’s a big savings, over the life of the loan.

On October 4, a new loan was introduced called the HECM Saver. The
interest rate is a little higher, probably because the loan is new, says
Peter Bell, president of the National Reverse Mortgage Lenders
Association. And you also can’t borrow as much with it as you can on a
HECM Standard loan. But you pay less upfront for origination and
insurance. The lender might even waive both those fees.

2. Save money on interest. You can get both the
Standard and Saver HECMs at fixed rates or variable rates. About 70
percent of loans are at fixed rates, Bell says. Borrowers want to know
exactly what they’re likely to owe in the future. But these loans are
running at 5 percent interest, and you have to borrow the full amount
available — even if you don’t need that much.

If you choose a credit line instead, you’ll get a variable rate,
currently running at about 2.5 percent. The rate might go up, but you’re
paying interest only on the amount of the credit line you use, not the
entire loan amount. It’s probably cheaper in the end.

Read more of this article.

About Reverse mortgages:  Reverse Mortgages have a lot of things to recommend them, though the article above does not mention the reasons one might have for avoiding them.  Find out definitively if they’re right for you at NewRetirement.com

Seniors Scam Seniors

Posted on December 22, 2010 by Jason

The Wall Street Journal, December 22nd, 2010

A grim category of crime is on the rise: senior-on-senior financial fraud.

According to regulators and prosecutors, there has been a significant
increase recently in the number of cases in which older investors have
been taken advantage of by elderly scam artists.

“That’s a definite new trend,” says Denise Voigt Crawford, the Texas
securities commissioner. “We’re seeing more cases of older people
ripping off other older people. Someone joked that seniors ripping off
their peers is becoming ‘the new retirement plan.’”

In Texas, John F. Langford, 76 years old, is expected to go on trial
in Amarillo next year on charges that he fraudulently sold about $6
million in promissory notes and what he called “private annuities” to a
circle of his fellow senior citizens. “We dispute all the state’s
allegations,” says Mr. Langford’s attorney, Tim Pirtle.

In Louisiana, meanwhile, Judith Zabalaoui, 73, pleaded guilty in
February 2009 to five counts of mail fraud and is now serving an
eight-year prison sentence after persuading at least 35 clients, many of
them elderly, to invest in two nonexistent companies that promised
“safe” returns of 13% to 26%. She had clients sign a power of attorney,
giving her access to their funds—and spent more than $3 million of their
money on her own expenses, including clothing and vacations, according
to court documents.

Anthony Joseph, Ms. Zabalaoui’s attorney, didn’t respond to requests for comment.

Many financial planners who got into the business during the bull
market of the early 1980s are senior citizens themselves now. With their
own wealth ravaged by the bear market of the past decade, many of these
people can no longer afford to retire. That, say regulators, may be
prompting some older financial advisers to engage in riskier and less
ethical behavior.

Read more of this article.

Interactions cause seniors to drop antidepressants

Posted on December 20, 2010 by Jason

Yahoo News, December 17th, 2010

More than half of older Americans taking an antidepressant for the
first time were already taking another drug that could interact with it
and cause side effects, researchers reported on Friday.

And a quarter of patients who suffered side effects stopped taking
antidepressants altogether, the study by a team at Thomson Reuters, the
University of Southern California, Sanofi Aventis and elsewhere found.

“We found a concerning degree of potentially harmful drug combinations
being prescribed to seniors,” Dr. Tami Lee Mark of Thomson Reuters,
parent company of Reuters, said in a statement.

Other studies have found that older adults are often taking dangerous combinations of prescription drugs, but doctors are not getting the message, the researchers report in the American Journal for Geriatric Psychiatry.

The research team used a Thomson Reuters database of claims for Medicare, the federal health insurance plan for people over 65.

They found more than 39,000 patients who started antidepressants between
2001 and 2006. “Twelve commonly reported antidepressant side effects
were identified in the month after drug initiation,” Mark’s team writes.

More than 25 percent of the patients were prescribed antidepressants and
another drug that could cause a major interaction. Another 36 percent
had potential moderate interactions.

“The most common side effects were insomnia, somnolence and drowsiness,
which occurred in 1,028 (2.6 percent) patients. The next most common
side effect was dizziness, which was documented in 416 (1.1 percent)
patients,” the researchers report.

The side effects meant patients often dropped the drug they were taking. Only 45 percent of those with documented side effects refilled the prescription for the same antidepressant, and a quarter quit taking antidepressants altogether.

Many adults are at risk of this problem, the researchers point out –
other studies show that 25 percent of older adults with chronic
illnesses such as arthritis or heart disease also have depression, and
they have also been shown to be helped by antidepressants.

Read more of this article.

Could You Retire Without Social Security?

Posted on December 20, 2010 by Jason

The Wall Street Journal, December 17th, 2010

This week’s landmark tax deal sharply changes the financial outlook
for Social Security. That has huge implications for your retirement. And
most people don’t have a clue what’s coming.

The deal, by cutting payroll taxes for one year, weakens Social
Security’s funding. It puts those payroll taxes “in play” as a political
football for the first time. And by freezing federal taxes at today’s
low rates, it will add at least $900 billion—and probably much more—to
our spiraling national debt. That threatens the ultimate financial
stability of the federal system.

Note that while Social Security is called a “trust fund,” that is
largely a matter of internal accounting. Your Social Security checks
ultimately come from the same flow of tax dollars as all other federal
spending. Social Security can’t stay solvent unless Uncle Sam does.

Ten years ago, the national debt was about $3.5 trillion. By 2020,
Congressional Budget Office calculations suggest it could be well over
$20 trillion. No kidding.

Read more of this article:

Social Security Optimization:  Learning how best to take advantage of Social Security can be key to securing your retirement, permitting you to take full advantage of what money is owed to you.  Find out more from NewRetirement.com

Boomers Recognize Need for Long-Term Care, But Fail to Obtain Coverage

Posted on December 20, 2010 by Jason

Reverse Vision, December 19th, 2010

A recent study of Baby Boomers finds that while the Boomers have
experienced the struggle their parents are facing with long-term care,
few are doing anything to acquire their own coverage. The results of the
survey show that more needs to be done to educate and motive Baby
Boomers to seek long-term care coverage sooner, rather than later.

The online survey, conducted by the research firm of Mathew Greenwald
& Associates, was taken by 1,073 Americans between the ages of 46
to 64. The survey revealed that personal experiences, such as the
current economic hardship or watching their parents age, have inspired
many Boomers to take hold of their financial future, including seeking
out long-term care coverage.

“This study explored the influence a parents’ long-term care
experience can have on their Boomer children,” said Mathew Greenwald, of
Greenwald & Associates. “Boomers overwhelmingly say they learned
the consequences of being unprepared, however very few currently have
long-term care insurance. Even though Baby Boomers face a more than
seven in ten chance that they will have some long-term care needs later
in life, many haven’t connected the risk to their own personal
situation.”

The survey’s findings exposed powerful recognition of the benefits of
having long-term care insurance among Baby Boomers – mainly for
financial and emotional benefits such as protecting their families from
paying, providing peace of mind, ensuring retirement savings remain, and
helping with the ability to leave an inheritance.

Approximately 72 percent of Baby Boomers whose parents had used
long-term care insurance said it was a “good value” for reasons such as
increasing quality of life, preserving the parents’ nest egg, and
lessening the family’s financial contribution to care. Of those Boomers
whose parents did not have long-term care coverage and needed it, 71
percent think that coverage would have benefited their families.

The study found that while more than half of the surveyed Boomers
worry that they will need long-term care themselves, only 9 percent of
these Boomers have actually purchased long-term care coverage. Many
signs point to the fact that Boomers do not fully understand how
long-term care financing works and do not grasp the concept of paying
now and benefiting later on in life.

Read more of this article.

Long Term Care Insurance:  Long Term Care coverage is a more and more critical portion of any serious retirement plan, and the lack of it can absolutely destroy not only your retirement plan, but those of your relatives and loved ones.  While not everyone should purchase it, everyone should at least consider it.  Find out more at NewRetirement.com

Portfolio Names Best Places for Seniors to Retire to in 2011

Posted on December 16, 2010 by Jason

Yahoo News, December 12th, 2010

As retirement communities
and senior living facilities clamor for the hard-earned Social Security
funds and personal savings of today’s retirees, Portfolio names the
best places to retire to. What’s hot, what’s not and why?

Who are today’s Retirees?

Portfolio
selected its list of best places to retire to by matching retirement
communities and senior living options to the likely customers: baby
boomers. Estimating that roughly 3 million Americans will reach age 65
and seek out the best places for seniors in 2011, this huge chunk of the
population eligible for Social Security represents a surprisingly large demographic with equally sizable buying power.

What’s Hot?

The undisputed hot spot is Bradenton-Sarasota, Florida. Second and third on the list are Prescott and Lake Havasu City,
which give a nod to Arizona. The list of the best places to retire to
continues on with only Florida locales: Cape Coral-Fort Myers, Naples,
Palm Bay-Melbourne, Homosassa Springs, Ocala, Punta Gorda and Port St.
Lucie round out the top 10.

What’s Not?

The bottom five places on the 157-city list of the
senior living hot spots are Harrisburg (Penn.), Jackson (MS), Columbia
(SC), Baton Rouge (LA) and Ogden (UT).

What Differentiates Bradenton from Ogden?

According to the statistical data,
the total 2009 population of Ogden was 542,642. Those aged 65 and above
made up 48,798 of these residents, which translates to roughly 8.99
percent. The median age in Ogden is 30 years and the percent of seniors
born out of state is above 45.

In contrast, Bradenton-Sarasota featured a 2009
population of 688,126, of whom 184,455 (or 26.81 percent) are senior
citizens. The median age is slightly above 48 and the percentage of
those moving into the retirement communities from out of state topped 95
percent.

The main draw, says Portfolio’s editor to PR Newswire, is the presence of an already established senior living community. A warm climate is another big plus.

How Much Credibility Has the List of the Best Places to Retire to in 2011?

The entrepreneur ready to expand into the baby boomer
market may wish to take a few pointers from Portfolio and set up shop
in Bradenton-Sarasota and surrounding areas. That said, do not bet the
farm on Bradenton becoming a lasting hot spot.

Read more of this article.

Relocation assistance:  Relocating, even to a good area for seniors, is not an easy process.  There are companies and organizations that can help with the physical, organizational, and logistical aspects of relocating or downsizing your home.  Find out more at NewRetirement.com

AXA Equitable Study Shows New Retirement Reality – People Will Work Longer

Posted on December 16, 2010 by Jason

AXA Equitable, December 16th, 2010

AXA Equitable Life Insurance Company released today results from its Retirement Reality Study
– one of the largest global surveys to poll workers and retirees on
numerous financial topics, including their views on and preparations for
retirement.

Results from AXA’s latest survey show that today’s working world
anticipates retiring much later than previous generations. The average
age of retirees polled around the world is 57 years old. However,
current workers anticipate retiring at 61 – a full 4 years later.

In addition to working longer, people in most countries are expecting
a lower standard of living in retirement. Globally, 43 percent of
workers and 30 percent of retirees believe their retirement income will
be insufficient. Working people know they need to prepare for
retirement, with 46 percent saying they have started to prepare and an
additional 37 percent intending to start later. 

“Our survey shows people realize they will be increasingly dependent
on personal savings in retirement but aren’t ready,” said Andrew
McMahon, senior executive vice president of AXA Equitable and president
of its Financial Protection & Wealth Management business. “Clearly
individuals are coming to terms with the reality that they won’t be able
to retire until many years after they hoped, unless they prepare
successfully.”

Americans Are Getting It Right at a Younger Age

Americans are among the top nations surveyed to say that they have
already started their retirement planning. Among U.S. Workers, 72
percent said they have started saving for retirement, compared with a
global average of 46 percent. Not only has a large percentage of
Americans started preparing for retirement, they are starting younger
than people in other countries. U.S. workers are among the youngest to
say that they have started to prepare for retirement; the average age in
the U.S. is 31, compared with the worldwide age of 34.

Although Americans seem more prepared than their counterparts in
other countries, the anticipated retirement age is still among the
highest of any country. The average American anticipates retiring at 64,
three years older than the survey average of 61, and six years older
than their desired retirement age of 58.

This is the fifth global survey released by AXA Equitable and its
parent, AXA Group, and is part of the company’s continued effort to
enhance its understanding of the retirement issues.

Additional survey findings include:

  • The main triggers to start saving for retirement in the U.S. are:

    • Employer contributions to a defined contribution plan
    • Reaching a key age
    • Advice from family or friends
  • Americans have the most self-reliant view of retirement savings,
    with 58 percent of those polled, a greater percentage than any other
    nation surveyed, preferring to fund their retirement savings on their
    own rather than depend on the government.
  • U.S. workers prefer meeting face-to-face with someone when
    purchasing an investment.  In addition, 65 percent of workers and 65
    percent of retirees have used insurance, financial or other
    professionals as sources of information to find out about financial
    products vs. 50 percent among workers and 44 percent among retirees
    across all countries.

“Because Americans proactively approach retirement planning it’s
especially important to seek advice from a trusted professional to help
them choose the right products for where they are in their lives,” said
Mr. McMahon.

Read more of this article.

Working in Retirement:  Boomers are all working longer than their parents did, and many who have already retired are now looking for a new part time or full time job, both for the money and for the challenge or stimulation.  Learn more about the prospects of working in retirement at NewRetirement.com

Closing In on Alzheimer’s Disease

Posted on December 15, 2010 by Jason

The New York Times, December 14th, 2010

Alzheimer’s
researchers are obsessed with a small, sticky protein fragment, beta
amyloid, that clumps into barnaclelike balls in the brains of patients
with this degenerative neurological disease.
It is a normal protein. Everyone’s brain makes it. But the problem in
Alzheimer’s is that it starts to accumulate into balls — plaques. The
first sign the disease is developing — before there are any symptoms —
is a buildup of amyloid. And for years, it seemed, the problem in
Alzheimer’s was that brain cells were making too much of it.


But now, a surprising new study
has found that that view appears to be wrong. It turns out that most
people with Alzheimer’s seem to make perfectly normal amounts of
amyloid. They just can’t get rid of it. It’s like an overflowing sink
caused by a clogged drain instead of a faucet that does not turn off.


That discovery is part of a wave of unexpected findings that are
enriching scientists’ views of the genesis of Alzheimer’s disease. In
some cases, like the story of amyloid disposal, the work points to new
ways to understand and attack the disease. If researchers could find a
way to speed up disposal, perhaps they could slow down or halt the
disease. Researchers have also found that amyloid, in its normal small
amounts, seems to have a purpose in the brain — it may be acting like a
circuit breaker to prevent nerve firing from getting out of control.
But too much amyloid can shut down nerves, eventually leading to cell
death. That means that if amyloid levels were reduced early in the
disease, when excess amyloid is stunning nerve cells but has not yet
killed them, the damage might be reversed.


Yet another line of research involves the brain’s default network: a
system of cells that is always turned on at some level. It includes the
hippocampus, the brain’s memory center, but also other areas, and is the
brain’s mind-wandering mode — the part that is active when, for
instance, you’re driving in your car and you start thinking about what
you will make for dinner. That brain system, scientists find, is exactly
the network that is attacked by Alzheimer’s, and protecting it in some
way might help keep the brain healthier longer.


For example, during nondreaming sleep, the default network is thought to
be less active, like a light bulb that has been dimmed. The network
also ramps down during intense and focused intellectual activity, which
uses different areas of the brain. One emerging theory suggests that if
the default network can be rested, amyloid production might be
decreased, allowing even an amyloid disposal system that was partly
hobbled by Alzheimer’s to do a better job.


The result of all this work is a renewed vigor in the field. After years
in which it was not clear how to attack this devastating disease,
scientists have almost an embarrassment of riches. The research is in
early stages, of course, and there are many questions about which
discoveries and insights will lead to prevention or a treatment that
works.

Read more of this article.

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