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The New Normal

Posted on March 3, 2011 by Jason

The New York Times, March 2nd, 2011

We’re going to be doing a lot of deficit cutting over the next several years. The country’s future greatness will be shaped by whether we cut wisely or stupidly. So we should probably come up with a few sensible principles to guide us as we cut.

 The first one, as I tried to argue last week, is: Make Everybody Hurt. The sacrifice should be spread widely and fairly. A second austerity principle is this: Trim from the old to invest in the young. We should adjust pension promises and reduce the amount of money spent on health care during the last months of life so we can preserve programs for those who are growing and learning the most.

 So far, this principle is being trampled. Seniors vote. Taxpayers revolt. Public employees occupy capitol buildings to protect their bargaining power for future benefits negotiations. As a result, seniors are being protected while children are getting pummeled. If you look across the country, you see education financing getting sliced – often in the most thoughtless and destructive ways. The future has no union.

 In Washington, the Republicans who designed the cuts for this fiscal year seemed to have done no serious policy evaluation. They excused the elderly and directed cuts at anything else they could easily reach. Under their budget, financing for early-childhood programs would fall off a cliff. Tens of thousands of kids, maybe hundreds of thousands, would have their slots eliminated midyear.

 Out in the states, the situation is scarcely better. Many governors of both parties are diverting money from schools in thoughtless and self-destructive ways. Hawaii decided to cut the number of days in the school year. Of all the ways to cut education, why on earth would you reduce student time in the classroom?

Read more of this article.

Reverse Mortgages Face Another Makeover

Posted on March 3, 2011 by Jason

US News & World Report, March 4th, 2011

Reverse mortgages are set for their second major change in less than a
year. Growing problems with loan defaults—estimated to have increased
in recent years to about 5 percent of all outstanding reverse
mortgages—have prompted regulators at the U.S. Department of Housing
and Urban Development to begin drafting new oversight rules. They
would require loan applicants to demonstrate their ability to pay property taxes
and home insurance premiums on their properties. The rules would apply
to the government’s home equity conversion mortgage (HECM) program,
under which nearly all reverse mortgages are made.

Reverse mortgages have been hailed by supporters as a way for
cash-strapped seniors (the youngest borrower in a household must be at
least 62 years old) to tap a portion of the equity in their homes and
free themselves from future mortgage payments. Under the terms of a
reverse mortgage, the loans are, in effect, paid off to lenders using
the remaining equity in the home that has not been paid to homeowners.
Homeowners can stay in their homes as long as they’re able, even after
these repayments and loan fees have exhausted all of the remaining
equity in the home.

However, the fees for reverse mortgages have been criticized by
consumer groups as too high. And there were past abuses in which
aggressive marketers convinced seniors to take out reverse mortgages
and put the loan proceeds into expensive investments that were not in
their best interest.

Last fall, the Federal Housing Administration—the arm of HUD that
oversees the HECM program—introduced a new HECM Saver loan that
features very low upfront fees. It also pays out a smaller percentage
of a homeowner’s equity than a standard HECM loan. This provides a
larger equity cushion against loan losses and possible claims on the
FHA insurance that provides safeguards to HECM borrowers and lenders.

Now, another large change in the program is under discussion, driven
by the growing number of loans that are in default. While reverse
mortgage borrowers no longer have to make mortgage payments to stay in
their homes, they do have to pay taxes, insurance, and other upkeep expenses.

Read more of this article.

About Reverse Mortgages:  Reverse mortgages do change as the regulations that support their existence are adjusted by the government in response to pressures and uncovered abuses.  We strongly recommend keeping up to date on the program by getting all the information you can.

Making the Most Out of Less

Posted on March 3, 2011 by Jason

The New York Times, February 3rd, 2011

JEFF NELSON, a manager in the Utah Health Department, says he constantly
scolds himself for not setting aside more for retirement. “It’s always
there, like that squeaky screen door in back that you want to fix , but
you never get to,” said Mr. Nelson, 40, the father of a 10-year-old and 7
-year-old. “I feel I have more pressing needs. I have to make the house
payment. I have to make the car payment.”

“I know you’re supposed to save more for retirement,” he added, “but I haven’t even started saving for college for my kids.”

Mr. Nelson, a state employee, may be a couple of decades from
retirement, but he is in line to receive a pension someday, and that
alone puts him in better shape that many Americans. But as he well
knows, it is not likely to be enough. Sad to say, people of Mr. Nelson’s
generation, the baby boomers’ children — in their 20s, 30s and 40s —
are likely to have an even rougher retirement than their parents, many
economists say.

And for the baby boomers themselves, retirement may not seem so rosy as it once did.

This year, the first of the nation’s 79 million baby boomers turn 65,
and while millions dream of comfortable retirements, perhaps in Boca
Raton, Fla., or Palm Springs, Calif., many will discover they will have a
tough time in retirement.

“The baby boomers will be the first generation that will do worse in
retirement than their parents,” said Teresa Ghilarducci, an economics
professor and retirement specialist at the New School for Social
Research in New York. “And the next generation of retirees will do a lot
worse; they fall off a cliff,” largely because so few of them will have
the traditional pensions that many of their parents and grandparents
had.

Americans planning to retire in five to 10 years could see their golden
years tarnished by a confluence of circumstances, including depressed
housing prices, soaring health costs and a fitful stock market that has
pummeled 401(k)
plans. Not only that, company after company has frozen or eliminated
its pension plan, and many members of Congress are pushing to scale back
Social Security
benefits — even though half of the nation’s retirees receive at least
90 percent of their income from Social Security. Its benefits average
$14,000 a year. So perhaps it should not be surprising that 45 percent
of America’s baby boomers are “at risk,” without enough to maintain
their living standards after they retire, according to the nation’s
leading center on retirement studies, the Center for Retirement Research
at Boston College.

Even one development that might seem to be good news — longer life spans
— could worsen retirement woes, because more and more people will live
for years after they have spent their nest eggs. For couples retiring
now, the chances are 50 percent that one member will live to 92.

Read more of this article.

Retirement Calculator:  Retiring is hard work, and no matter where you are in the process, retired yet or not, it helps to have a coherent plan, or at least to analyze your current strategy’s weaknesses.  Consider what you can do to help yourself with the NewRetirement Retirement Calculator

Seniors Concerned About Side Effects of Heart Drugs

Posted on March 1, 2011 by Jason

Yahoo News, March 1st, 2011

Older adults carefully weigh the
benefits and risks of cardiovascular disease prevention drugs before they
decide whether to take them, finds a new study.

And if the benefits don’t greatly outweigh the risks, they aren’t that
interested.

Researchers interviewed 356 people with an average age of 76 about
their willingness to take medication that would reduce the risk of a heart
attack over the next five years, but caused various side effects,
including fatigue, dizziness, nausea and fuzzy or slowed thinking.

Eighty-eight percent of the participants said they would take the
medication if it had no adverse effects and led to six fewer heart
attacks per 100 people. That’s the average risk reduction of current
medications to prevent cardiovascular disease.

“In contrast, large proportions (48 percent to 69 percent) were
unwilling or uncertain about taking medication with average benefit
causing mild fatigue, nausea, or fuzzy thinking, and only three percent
would take medication with adverse effects severe enough to affect
functioning,” wrote Dr. Terri R. Fried of Yale University School of
Medicine and the VA Connecticut Healthcare System, and colleagues, in a
news release.

The greater the benefit offered by the drug, the more willing people
were to take medication.

Read more of this article.

A New Credential for Home Care Aides

Posted on March 1, 2011 by Jason

The New York Times, February 25th, 2011

When the Direct Care Alliance first offered the test that would lead to
becoming a credentialed “personal care and support professional,” Maria
Frank, a 60-year-old home care aide in Nazareth, Pa., signed up.

She didn’t need the certificate to land a job; she’d been on the job
for more than two decades, and for the past 13 years had cared for the
elderly through Home Instead, the national home care franchise. It was
mostly for her own satisfaction that she wanted to pass the test.

“It was hard,” reported Ms. Frank. “It’s a pretty long test.” Two
hours, to be precise. But like 80 percent of the first 100 workers who
took the test in a pilot project, she passed. Her certificate — her
first professional credential — is in the mail.

The Direct Care Alliance,
which represents hands-on employees who care for the elderly and
disabled in facilities and in people’s homes, sees this credentialing
process as key to elevating the home care work force. “These workers
have a lot of knowledge and skills, but they don’t have a way to prove
it,” said Helen Hanson, professional development manager at the
alliance. “The credential is a way to show employers and prospective
employers their professionalism.”

For the elderly and their families, finding competent, caring home
care aides can be a daunting task. Do they go with someone advertising
on Craigslist, hoping her references are reliable? Or hire through an
agency, trusting that it has thoroughly vetted its employees? They’ll
pay more for agency people, but the workers themselves will take home
much less, and agency rules — many prohibit aides from driving their
clients, for instance — may not dovetail with an elder’s needs. Yet
hiring independently, unless an aide is already well known to the
community, can be a scary prospect.

Even the nomenclature is confusing: there are personal care
attendants and home care aides and home health aides. (And one wishes
that the alliance hadn’t selected such a mouthful — “personal care and
support professional” — for its new credential.)

But this is a field that resists standardization. Training and
certification requirements for home care aides remain a hodgepodge.
Thirty-five states regulate home care agencies and set varying
requirements for their workers, said Bill Dombi, vice president for law
at the National Association for Home Care and Hospice, which has also
operated a certification program (currently suspended) for Medicare home
health aides. But 15 have no regulations for agencies. And very few
states regulate individual caregivers at all.

So a national credential for home care workers makes sense. The
welter of state regulations may limit the usefulness of the Direct Care
Alliance’s new testing program, said Marla Lahat, executive director of
Home Care Partners, a nonprofit agency in Washington. Employers must
still hire only a certified nursing assistant to comply with state laws.

But she thought the alliance’s credential could be a big help to
independent aides who don’t work for agencies or to workers in states
without such regulations. “They can say, ‘I’m not just a baby sitter or a
housekeeper. I have skills. I passed a test,’ ” Ms. Lahat said.

Read more of this article.

Long Term Care Insurance:  If regulation forces standards on long term care givers, then costs are liable to increase even further, making advanced planning even more necessary.  Consider the benefits of long term care insurance at NewRetirement.com

When Dementia Drains the Pocketbook

Posted on March 1, 2011 by Jason

The New York Times, February 28th, 2011

Wendy Miller first became alarmed when her mother began complaining
during their phone conversations. “I’m spending so much money,” she
fretted. “I can’t figure out why I don’t have any money.” This was a
departure: Ms. Miller’s mother, always responsible about her finances,
never liked talking about them. Ms. Miller wondered what was going on.

The refrain continued for months. And so Ms. Miller, now 53, called
her mother’s friends in Massachusetts, who told her that her mother was
having a lot of work done on her house. When Ms. Miller flew from her
home on the West Coast to investigate, she discovered that her mother
had paid or lent a “handyman” tens of thousands of dollars. She also
found stacks of unpaid bills and a lien on the house, because her mother
had neglected to pay her property taxes.

Faced with evidence that their parents have grown too confused to
manage their finances, what do family members do? Most react the way
this daughter did: They turn to physicians.

But doctors, by training and inclination, often are ill equipped to
recognize or advise on financial problems. “I had to go through three
doctors before I found someone who didn’t see me as the problem,” said
Ms. Miller.

The low point came when a neuropsychiatrist said of her mother, “In this country, we give people freedom to fail.”

“It was an appalling moment,” said Ms. Miller, who’d grown frantic
about her mother’s impoverishing herself just as it was becoming obvious
that she would need a lot of expensive help. “You know how vulnerable
your parent is, and no one else seems to grasp it.”

Read more of this article.

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