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California state employees take advantage of pension perk

Posted on February 16, 2011 by Jason

The Los Angeles Times, February 15th, 2011

Tens of thousands of California state workers are taking advantage of a
perk that pays them pension benefits for years they don’t actually work,
and reformers looking for places to cut have put it at the top of the
list.

State law allows the employees to increase their retirement benefits by
tacking up to five fictitious years — known as “air time” — onto their
public service. Although they pay a fee for the privilege and officials
say it is high enough to cover the eventual payouts, critics of air time
note that the boost can cost taxpayers millions when the state pension
system’s investment income falls short, as it has in recent years.

Air time offers a return nearly twice as generous as a similar benefit —
known as an annuity — that can be purchased on the private market, said
Dan Pellissier, who advised former Gov. Arnold Schwarzenegger
on pensions. Pellissier, who as a state employee purchased five years’
credit, is now pushing to eliminate air time as president of California
Pension Reform.
Private financial advisors agree.

“It’s a phenomenal deal for retirees, but it’s an absolute fleecing of
the taxpayers,” said Scott Hanson, a principal in Sacramento-based
investment firm Hanson McClain.

Hanson said he gets calls about air time frequently and advises nearly
all state employees to sign up. It offers a guaranteed 7% to 8% return,
as opposed to a 3% return available for similar investments in the
private sector, he said.

Gov. Jerry Brown
zeroed in on the benefit after mentioning pension reform in his State
of the State speech last month. Pressed for ideas on how to fix the
chronically underfunded public pension system, he told reporters: “I
certainly think getting rid of the ability to buy air time would be a
good place to start.”

Eliminating air time for thousands of employees —- at least 47,000 had
signed up by September — would not solve the financial problems facing
the California Public Employees’ Retirement System, which covers 1.6
million state workers and retirees. But doing away with an advantage for
state workers that’s not offered to most other citizens could help
Brown show he is working to tighten the state’s belt.

The fees collected from state workers buying air time are poured into
the state pension fund, which suffered devastating losses during the
recession. In 2003, the taxpayers’ contribution to that fund was about
7% of workers’ salaries. This year it will be 23% — or $4 billion — to
help absorb the losses, according to Brown’s proposed budget.

State officials said they could not determine how much, if any, of that sum would go to air-time payouts.

Read more of this article.

No Official Reverse Mortgage Complaints in Texas

Posted on February 16, 2011 by Jason

Reverse Mortgage Daily, February 16th, 2011

Despite complaints from Consumer Reports about reverse mortgages,
none have been reported in the Lone Star State according to the Texas
Department of Savings and Mortgage Lending.

Chris Schneider, spokesperson for the department told the Fort Worth Star Telegram
it has had a few inquiries, but no official complaints.  ”If the public
has a concern, they can check with us to make sure the broker is
licensed and legitimate,” he said.

Consumers can file a complaint and it will be investigated, but so
far the department said it has no evidence of improper sales tactics in
on-site visits or reviews of mortgage brokers’ records, Schneider said.

Norma Garcia, publisher of Consumer Reports told the paper that the
reverse mortgage marketplace is seeing trouble in other parts of the
country, which could show up in Texas soon.

“Nationally, these loans have exploded in the past few years,” Garcia
said. “Many seniors have paid a mortgage or several mortgages in their
lifetime, but this is a very different product. We caution people to
take extra steps, meet with counselors and other professionals to
determine if this is best product for you.”

Read more of this article.

About Reverse mortgages:  Comforting as this news might be, there are of course less than reputable reverse mortgage companies in operation.  For that reason, NewRetirement.com vettes every single lender, broker, or reverse mortgage professional that we work with, such that only the most reputable of lenders make it into our network.  Find out more at NewRetirement.com.

Reverse Mortgages: Good For Seniors?

Posted on February 16, 2011 by Jason

National Public Radio, February 16th, 2011

Bank of America
recently announced it would stop offering reverse mortgages to
customers. Reverse mortgages have been marketed toward elderly
homeowners, as a way to use equity of the property for extra cash. But
how exactly does it work and is it a good idea? In Tell Me More’s
regular “Money Coach” segment, personal finance contributor Alvin Hall
explains reverse mortgages to host Michel Martin, and lays out the pros
and cons.

MICHEL MARTIN, host:

And now we turn to
matters of personal finance. And if you’ve surfed TV stations recently,
you might’ve come across a commercial like this one.

(Soundbite of TV ad)

Mr.
FRED THOMPSON: hi, I’m Fred Thompson. And, you know, if you’re like a
lot of folks out there lately, then finances might be a little tight.
Well, maybe it doesn’t have to be that way. ‘Cause if you’re 62 years or
older and own your own home, then join hundreds of thousands of other
Americans who have used a reverse mortgage as a safe, effective
financial tool.

MARTIN: Now, this
advertisement is from the American Advisers Group and it’s just one of
the dozens out there promoting so-called reverse mortgages. Now,
recently, Bank of America announced it would stop offering this type of
mortgage that it could, quote, concentrate on traditional mortgages,
like, other nontraditional mortgage products like home equity loans.

The
learning curve might be steep for the average consumer, so, we’ve
called upon our money coach Alvin Hall to tell us more about what these
are and whether you might want one or not. Alvin, welcome back.

ALVIN HALL: Glad to be here.

MARTIN: So, what exactly is a reverse mortgage?

HALL:
A reverse mortgage is a loan made against a equity in your house. If
you’re 62 years or older and you really need some money, you can go and
apply for this and they will give you an amount of money based on the
equity in your house. It allows you to tap into it.

And
there’s some good things about this and some bad things. The bad things
are that usually these types of reverse mortgages come with huge
upfront fees. Organizations that hit you hard for the fees, so it ends
up being a huge percentage of the equity that you have in the house. But
for somebody’s who’s exhausted all options, this is sometimes a way for
them to stay in their home.

MARTIN: Now,
why would Bank of America get out of this area? It seems that there’s
this conflicting news on this point. On the one hand, last October, the
FHA, the Federal Housing Administration announced that it would offer
something called a home equity conversion mortgage, which is a type of
reverse mortgage, but now Bank of America says it’s getting out.

HALL:
Probably because of the fees. In the new mortgage structure, which is
called the home mortgage conversion, the home equity conversion
mortgage, the upfront fees have been reduced to .01 percent and that’s
pretty low. In the past they’ve been much, much higher. And I think it’s
just not as profitable for Bank of America. They’re going to spin it a
different way, of course. They’re going to say, you know, we’re going to
concentrate on our core business. But in reality, they’re just not as
attractive.

Read more of this article.

About Reverse Mortgages:  The debate concerning reverse mortgages has not abated, and many seniors are struggling with the decision of whether or not the program is a good idea for them.  Find out the facts about the program at NewRetirement.com

Berries May Offer Sweet Protection Against Parkinson’s Disease

Posted on February 15, 2011 by Jason

Yahoo News, February 13th, 2011

People who eat foods rich in
antioxidants called flavonoids, especially berries, may be protecting
themselves from developing Parkinson’s disease, a new study suggests.

In addition to berries, flavonoids are found in a variety of foods such
as apples, chocolate, and citrus fruits. These compounds have been touted
as protective against some diseases because of their antioxidant effects,
researchers say.

However, not all flavonoids are created equal. Only those known as
anthocyanins, found in berries and other red/purplish fruits and
vegetables, protected both men and women, according to the results of this
study, which was funded by the U.S. National Institutes of Health.

“Although it’s too early to say that eating berries can reduce
Parkinson’s disease risk, benefits of berries have been reported in
several previous studies, for example, lowering risk of hypertension,”
said lead researcher Dr. Xiang Gao, an instructor in medicine at Harvard
Medical School. “So it is good, at least [doing] no harm, if we can have
2-3 cups of berries a week,” he said.

“When we combined all individual flavonoids together, total flavonoid
intake was also associated with a significantly lower Parkinson’s disease
risk in men — but not in women,” Gao noted. Only anthocyanins seemed
protective for both sexes.

The results of the study are scheduled to be presented in April at the
American Academy of Neurology’s annual meeting in Honolulu.

For the study, Gao’s team collected data on over 49,000 men who took
part in the Health Professionals Follow-up Study and more than 80,000
women from the Nurses’ Health Study.

Participants filled out detailed questionnaires about their diets.
Using that information, the researchers calculated the amount of
flavonoids people consumed. In addition, they also looked at the
consumption of tea, berries, apples, red wine and oranges and orange
juice.

Over 22 years of follow-up, 805 people developed Parkinson’s disease.
Among men, those who consumed the most flavonoids were 40 percent less
likely to develop the neurodegenerative illness compared with men who
consumed the least amount of flavonoids, the researchers found.

However, among women, there wasn’t any relationship between total
flavonoid intake and the risk of developing Parkinson’s, Gao’s group
notes.

Read more of this article.

Getting Dad to Talk About It

Posted on February 15, 2011 by Jason

The New York Times, February 11th, 2011

My widowed father-in-law didn’t tell anyone about his symptoms — not
his doctor, and not his grown son, who found out only when a member of
the extended family called to say my husband needed to fly across the
country immediately to see his dad.

By that point, the kidney cancer that would have been easy to treat
if detected early had passed the fail-safe point. My father-in-law was
not the kind of guy who liked to depend on people, so he made sure he
had to for only a very short time before he died.

He was an extreme example of a familiar dynamic, which Deborah
Tannen, a professor of linguistics at Georgetown University, calls “the
guy’s view.” Dr. Tannen, the author of seven books about how we
communicate with one another, says that many older men consider keeping
difficult information to themselves a badge of courage. In this view,
it’s what men are supposed to do to keep from upsetting the womenfolk.

But that often leaves caregivers struggling to improve communication,
particularly in the doctor’s office. Fortunately, there are things
adult children can do for the many parents — men leading the pack, but
some moms, too — who are reluctant to talk about what’s bothering them.

In a study of 12,000 Medicare recipients published in The Archives of
Internal Medicine in 2008, Debra Roter, a professor of public health at
Johns Hopkins University, and her colleagues found that elderly patients who were accompanied by someone reported greater satisfaction with their doctors’ visits than those who showed up in waiting rooms alone.

“Having a companion made those who were more ill or less educated on a
par with people who were better off on those variables,” said Dr.
Roter. An adult child accompanying a parent to a doctor’s appointment,
she added, can help in very specific ways:

Read more of this article.

Privately, Public Employees See Cuts as Inevitable

Posted on February 14, 2011 by Jason

The New York Times, February 13th, 2011

The meeting of the public-workers’ union had ended, the rallying cries about hostile lawmakers and ominous contract deadlines had given way to a buffet dinner.

Sitting down to eat, Andrea Douglas, a claims representative for the State of New Jersey for the past 10 years, quietly conceded what few union leaders say aloud: Government workers have to give up some of their benefits. “I’m a realist,” Ms. Douglas said. “The private sector is looking at us, and we do look good. I know we’ll have to give. Everybody else is asking, ‘How am I going to pay rent?’ ”

Around the table, fellow workers stared, taken aback by her talk of concessions.

“You don’t see it coming?” she said to them. “We’re going to have to give. I’m more than willing to pay more to support my benefits. But you can’t ask me to give so much that I can’t afford to live. At least negotiate with me on that.”

 Public-sector workers these days are under assault, their hard-won salaries and benefits depicted as drains on the body politic. Labor unions have responded angrily to that sort of talk, pledging to fight to keep what is theirs.

But in interviews and discussions among themselves, public employees express more complicated feelings. The police officers, teachers and workers are struggling with anger and fear. But many also acknowledge that the world they have known and the assumptions they have built their lives on are crumbling before their eyes.

Nowhere has the environment for public workers been more stinging than in New Jersey, where Gov. Chris Christie has earned folk-hero status for his aggressive antiunion posture. And the public has responded: a Quinnipiac University poll released on Thursday showed voters here favored by wide margins wage freezes, furloughs and pension cuts for those on the state payroll.

Read more of this article.

What is CLASS, and will it work?

Posted on February 14, 2011 by Jason

Center for Retirement Research at Boston College, February 12th, 2011

Long-term care is the major uninsured expense for
most retirees. Neither private health insurance nor
Medicare covers long-term care expenses, although
Medicare provides for care in a skilled nursing facility
for up to 100 days following hospitalization. Longterm
care insurance is available in the private market,
but few people purchase plans due to high premiums
and limited benefits. As a result, many turn to family
members for care or are forced to deplete their
resources to qualify for Medicaid to pay for nursing
home care.

Although not yet commonly known to the public,
the new health care reform legislation establishes a
voluntary, long-term care insurance program known
as the Community Living Assistance Services and
Supports, or CLASS. CLASS is designed to overcome
the major problems in the existing system, which
forces families of those needing long-term care to
impoverish themselves, places an enormous burden
on relatives caring for loved ones, and supports institutionalization
over home care. This brief explores the
potential for CLASS to solve the nation’s long-term
care challenge.

This brief proceeds as follows. The first section
discusses how families currently cover the burden of
long-term care. The second section describes CLASS
and compares it to private insurance. The third section
identifies adverse selection – that is, participation
mainly by the less healthy – as the major stumbling
block facing CLASS. The fourth section presents a
simple actuarial model to demonstrate the sensitivity
of the premiums to the health and age distribution
of participants. The final section concludes that the
program faces enormous challenges, but a number of
programmatic changes and a major advertising campaign
could improve its chances of success. Without
adjustments, adverse selection will create a death spiral
of rising premiums and declining participation.

Read more of this article.

Long Term Care Insurance:  CLASS is designed to enable greater access to Long Term Care Insurance by the general public.  Such programs can potentially be a life saver should it become necessary for you to obtain long term health care.  Consider your options at NewRetirement.com

Housing Market Looks Sickest in Cities That Once Seemed Immune

Posted on February 14, 2011 by Jason

The New York Times, February 13th, 2011

Few believed the housing market here would ever collapse. Now they wonder if it will ever stop slumping.

The rolling real estate crash that ravaged Florida and the Southwest is
delivering a new wave of distress to communities once thought to be
immune — economically diversified cities where the boom was relatively
restrained.

In the last year, home prices in Seattle had a bigger decline than in
Las Vegas. Minneapolis dropped more than Miami, and Atlanta fared worse
than Phoenix.

The bubble markets, where builders, buyers and banks ran wild, began
falling first, economists say, so they are close to the end of the cycle
and in some cases on their way back up. Nearly everyone else still has
another season of pain.

“When I go out and talk to people around town, they say, ‘Wow, I thought
we were going to have a 12 percent correction and call it a day,’ ”
said Stan Humphries, chief economist for the housing site Zillow, which
is based in Seattle. “But this thing just keeps on going.”

Seattle is down about 31 percent from its mid-2007 peak and, according
to Zillow’s calculations, still has as much as 10 percent to fall. Mr.
Humphries estimates the rest of the country will drop a further 5 and 7
percent as last year’s tax credits for home buyers continue to wear off.

“We went into 2010 feeling gangbusters, thanks to Uncle Sam,” Mr.
Humphries said. “We ended it feeling penniless, with home values
tanking.”

The fact that even a fairly prosperous area like Seattle was ensnared in
the downturn shows just how much of a national phenomenon the crash has
been. The slump began when the low-quality loans that drove the latter
stage of the boom began to go bad, but the resulting recession greatly
enlarged the crisis. Many people could not get a mortgage, and others
simply gave up the hunt.

Read more of this article.

Reverse Mortgage Rates Begin to Rise, Lower Proceeds for Borrowers

Posted on February 10, 2011 by Jason

Reverse Mortgage Daily, February 9th, 2011

Over the last week reverse mortgage pricing has taken a dramatic turn for the worse as rates on bonds continue to rise.

“There has been a fairly large bond market selloff in past few days,” said Jeff Traister, reverse mortgage trader at Cantor Fitzgerald.
A good benchmark for Ginnie Mae’s HMBS program is the 5-year U.S.
Treasury bond, said Traister, which has seen rates go from 2.021% as of
Feb. 1 to 2.385% as of Feb. 8.

Due to aggressive pricing from lenders recently, some have been
forced to pull back significantly as bond prices began to rise. “There
were some lenders who had very aggressive pricing versus where they
could execute with the street,” Traister said.

Part of the problem is that the industry is relying on the 5.09%
coupon, which allows borrowers to receive the most in proceeds. If
lenders started to raise the rate on the HECM fixed product, pricing
would likely come back into line, but borrowers would see the amount of
proceeds fall.  ”We have rates going up, so we’re losing principal limit
factors,” said Jeff Lewis, Chairman of Generation Mortgage. “Borrowers will likely never see the deal they had previously in terms of proceeds.”

Read more of this article.

About Reverse Mortgages:  If interest rates continue to rise, it will negatively affect the amount of money that homeowners can qualify for from a reverse mortgage.  As such, it might be beneficial to consider getting a reverse mortgage now, rather than waiting for interest rates to price you out.  Look into the options at NewRetirement.com

Medicare chief says health law working

Posted on February 10, 2011 by Jason

Yahoo News, February 10th, 2011

President Barack Obama’s chief of health programs for the elderly and
poor on Thursday said the year-old U.S. healthcare overhaul was
reducing Medicare costs and called a push by congressional Republicans to repeal the law unfortunate.

Medicare and Medicaid services administrator Donald Berwick, appearing
before a congressional panel, rebuffed Republican claims that the law
would raise costs for people enrolled in Medicare Advantage (MA), which
uses private insurance providers such as Humana Inc and UnitedHealth Group Inc, to deliver benefits.

Berwick told the House of Representatives Ways and Means Committee that
the latest data show premiums are down an average 6 percent this year,
while enrollment is up by 6 percent to more that 12 million people.

Separately, Oppenheimer & Co analyst Michael Wiederhorn said he
expects growth in private Medicare plans to continue to swell as more of
the nation’s baby boomer population qualifies for the program, which
covers people age 65 or older.

Such plans “should be an attractive alternative to control costs …
compared to the inefficient Medicare Fee-For-Service,” he wrote in a
research note, adding that cuts to the plans under the health law could
squeeze HMO profits.

Overall, shares of HMOS were up slightly compared to the larger S&P
500 index. Humana shares were down 0.7 percent at $58.14 while UnitedHealth was up nearly 1 percent at $42.46 in afternoon trade on the New York Stock Exchange.

As Berwick testified, Democrats released a report by the Government Accountability Office that said many Medicare Advantage programs spend a high percentage of premiums on administrative costs and profits.

“One out of every three MA enrollees is in a plan that spends less than
85 percent of their projected Medicare payment on medical expenses,
which means more than 15 percent of their projected Medicare payment
goes to overhead and profit,” the report said. The healthcare overhaul
places limits on how much insurers can spend on profits and
administrative costs.

Read more of this article.

Supplemental Medicare Insurance:  The new healthcare reform laws have definitely affected Medicare, but there is still a need at times for additional insurance.  Consider the options available to you at NewRetirement.com

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