Archive for the 'Opinion' Category

Putting the Biological Clock on Hold

Posted on May 15, 2012 by Rohith

Women now have an option of buying insurance for having children; egg freezing. Egg freezing, or Oocyte Cryopreservation enables women to put their biological clock on hold, by controlling their reproductive future by preserving their fertility by freezing their eggs. According to a New York Times article, the procedure is expensive, costing between $8,000 and $18,000. Although this process has no guarantees, many would-be grandparents are willing to take the risk with their daughters by supporting them financially. Jennifer Hayes, 35, has gone through the process of preserving her fertility and blogs about her experiences and explains the basics of egg freezing here, on her website.

With all the benefits of preserving one’s fertility, there come some risks to be taken:

  • Damage to the Oocyte – Intracellular ice may damage and affect the functions of the the female reproductive cell prior to the fertilization process
  • There have been no systematic follow-up studies either of children born from frozen eggs (fewer than 2000 worldwide) or of success rates, especially for women in their late thirties who are the primary users

Corporations to the Rescue?

Posted on September 2, 2011 by Erin

Today, the U.S. Labor Department released it’s new jobs report, and the news isn’t the best.  Unemployment remained at exactly 9.1%.  There are a few different reasons why this happened, one of them being the 22,000 Minnesota government workers that came back to their jobs after their strike which was unfortunately balanced out when 45,000 Verizon workers went on strike.  Feeling frustrated, the CEO of Starbucks decided to call a town hall meeting and have companies, not the government, take a pledge that they will create the jobs to get America back on track again.  He has successfully gotten the CEO’s of over 100 companies on board with him.  Which got us thinking – what are the biggest companies?  How many people do they employ?  Do they really have the power to change America’s unemployment problem?

The nation’s largest employer is WalMart which puts to work 1.8 million workers.  They are followed by McDonald’s at 447,000 and UPS at 407,000 employees.  That’s a lot of people!  Especially when you compare those numbers to entire city populations.  One of the U.S’s biggest cities, Chicago, has a population of about 2.7 million – if you add up how many people the top 10 companies employ, that’s almost 5 million people. This means the top 10 employers in this country could employ the entire city of Chicago, twice!  Maybe these CEO’s can help this country!

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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.

The false promise of compound interest

Posted on February 25, 2011 by Jason

Reuters, February 17th, 2011

A loyal reader on the sell side emails to object in strenuous terms to my contention
that, when it comes to saving for retirement, “by far the most
important number is the total sum of dollars that you’ve put into your
retirement funds over time; the annualized rate of return on those
dollars is secondary”.

Being a sell-sider, he attached an Excel spreadsheet. He assumes you
start saving $6,000 a year every year from age 25 to age 60 and
calculates that such a person would end up with $575,000 at a 5% return
and $1.12 million at an 8% return.

But of course nobody does that. Saving is lumpy; very few of us
diligently start socking away $6,000 a year at age 25. (Well, maybe
those of us who go on to become investment bankers do. But no one’s
worried about them.) In any case, of course if you keep savings constant, then the rate of return makes all the difference. That’s a tautology.

But much more common is the person who struggles through their 20s,
brings up kids in their 30s and then wakes up in a cold sweat one
morning in their mid-40s, worrying about what they’re going to live on
when they retire. By that point they’ve had enough pay raises that
they’re going to need an enormous sum in order to maintain the style to
which they’ve become accustomed. But at the same time they’re spending
everything they’re earning already. So they put away what they can and
count on 8% or 10% annualized returns — or even more, if they’re
investing in dot-com stocks or Miami condos — to get them where they
want to be.

This, needless to say, is a strategy which is likely to end in tears.
And it’s not just individuals thinking this way, either —
municipalities do, too, and they really ought to know better.

My point is that the range of remotely sensible investment strategies
for a working person is actually pretty narrow. You can’t just wave a
magic asset-allocation wand and change your annualized return over a
period of 35 years by 300 basis points. Frankly, you’d be doing well if
you could improve it by 30 basis points. The market will return whatever
the market will return and you will do a little bit worse than that,
most likely.

So the way to have a comfortable retirement is not to think that by
making a clever choice when it comes to stock-picking or investment
strategy that you can somehow make up for the money you’re spending
rather than saving. Instead, it’s to diligently save as much as you can,
from as early an age as possible and simply invest it in a non-idiotic
manner. The more you save, especially in your 20s and 30s, the more
you’ll end up with in retirement.

Wall Street would love us to believe that the magic of compound
interest gives us a free lunch; that a small amount of savings, if
compounded at a high enough rate, can set us up for life. That might be
true mathematically, but saving doesn’t work that way in the real world.
Interest rates are low, now, and wages are growing sluggishly.

Read more of this article.

Reverse Mortgages Provide Financial Independence for Seniors

Posted on December 13, 2010 by Jason

Yahoo News, December 12th, 2010

Reverse mortgages help seniors stay in their homes while maintaining
their dignity and financial independence, and provide them with the
flexibility to use their built-up home equity while preserving their
other resources to cover unexpected emergency expenses without depleting
their savings or bankrupting them, say senior advocacy groups and
reverse mortgage industry leaders.

A report released on December 8
by Consumers Union and other special interest groups claims that
federally insured reverse mortgages are not financially viable tools for
seniors and cautions seniors from using reverse mortgages. The report
is based on dated information and does not take into account
pro-consumer reforms adopted by the industry and distorts loan
information to scare consumers and seniors about the highly successful
reverse mortgage program that earns high marks in customer satisfaction.

“Seniors
should know that reverse mortgages are sound economic tools that allow
them to leverage their own wealth to continue to support themselves and
live in their homes longer. The Consumers Union report does a disservice
to seniors by repeating myths about the program. The reality is, the
reverse mortgage program is government-backed and heavily regulated by
FHA to protect consumers and their interests,” said Jeff Lewis
of the Coalition for Independent Seniors. “It simply is not fair to say
that 26 instances of questionable practices among over 2000 lenders
nation-wide is reason not to explore reverse mortgages to help you meet
your financial needs.”

Thair Phillips,
President of RetireSafe, a 400,000-supporter strong national advocacy
group for older Americans, believes that reverse mortgages are an
important option for seniors.  He said, “Having a financial option that
allows seniors to remain in their homes is a godsend to our members who
have obtained reverse mortgages in these troubled financial times.
 Seniors don’t want to depend on the government but would rather use the
equity they worked so hard to build up in their homes as a way to
remain in their home and continue their older years in dignity.”

The
Consumers Union report relies heavily on outdated information that has
appeared in previous Consumers Union reports and does not take into
account the consumer protections adopted by the industry in recent
years, including: a law banning cross selling of additional financial products; stronger requirements for financial counseling; regulations against deceptive advertising; and consumer protections that prevent Seniors from losing their homes.

The
federally backed Home Equity Conversion Mortgage (HECM) program is
administered by the Federal Housing Authority (FHA). FHA works
tirelessly to ensure that the HECM program is a “break even” for the
taxpayer and also ensures that adequate consumer protections are in
place. As a result, FHA has developed HECM products that provide more
consumer protections and more economic value to the borrower than any
similar products offered in the private sector.  

Seniors are satisfied with the program, their loans and their lenders. An AARP report in 2007 found that only 3% of reverse mortgage lenders were dissatisfied with their loans.

“We
have a good product, seniors like it and it benefits the seniors, their
families and society as a whole,” said Lewis. “Consumers Union didn’t
talk with lenders or borrowers before issuing this report. If they had
they’d hear what we hear from seniors – that the program has given them
the financial independence they want and the ability to meet unexpected
expenses and continue to live in their homes.”

Read more of this article.

About Reverse Mortgages:  Full disclosure time:  The above article reads more like a press release to this editor than an objective article, but at the same time raises points that are very important, such as the findings of the AARP report concerning consumer satisfaction.  We recommend therefore finding out the facts for yourself at NewRetirement.com.

The Empty Chair in the Dining Room

Posted on December 8, 2010 by Jason

The New York Times, November 22nd, 2010

Every other weekend, I drive the 55 miles between Brooklyn and Tinton
Falls, N.J., where my father lives at an assisted living facility called
Renaissance Gardens. Before I can give him a hug, see how he’s feeling
and wheel him out to the car so we can go out for lunch and take care of
his shopping, I pass the “Dearly Departed” table in the corridor
leading to his room.

A frame sits on the table, displaying a face, sometimes smiling and
sometimes not, along with a name, a room number and the date that person
died. Almost always, the face has changed since my last visit.

Death is a constant presence at an assisted living facility, and for
those of us who visit, the memorials and shrines can be a jarring
reminder: This could be my father’s last home. Yet this small
recognition can be crucial for older people, helping them come to terms
with mortality and reassuring them that they play an important role in
the community.

“These people have suffered so many losses: their spouse, siblings,
sometimes their own children, their home, their mobility,” said Lynn
Harper, the chaplain at Renaissance Gardens who tends to the “Dearly
Departed” table. “The losses have come so fast, such an inundation.” The
table helps seniors adapt to death’s frequency, she said.

About 900,000 people call an assisted living facility home, according
to the National Center for Assisted Living. The average stay lasts
about 28 months. More than half of these residents experience declining
health and move into a nursing facility, but a third will die while
still in assisted living.

“A person could be at dinner one night and die in the middle of the
night, and then the room could be empty in the morning,” said Rabbi
James Michaels, director of pastoral care for the Charles E. Smith Life
Communities in Rockville, Md.

As with many other aspects of their lives, assisted living residents
need help with the grieving process. Residents often can’t travel to
funerals or to sit shiva; the rituals and traditions must be brought to them. Rabbi Michaels conducts a couple of in-house memorial services each month.

Senior housing administrators are devoting more attention to
recognizing residents’ deaths, said Donald Schumacher, president and
chief executive of the National Hospice and Palliative Care
Organization. Death may no longer terrify older people the way it once
did, he said, in part because they have more opportunities to discuss
and accept it, especially in housing facilities.

“It helps move away from the notion that these places are just
warehouses for the elderly,” said Dr. Schumacher. “It’s a community, and
the residents contribute in a lot of ways.”

For the most part, families are more than cooperative. But at my
dad’s residence, Ms. Harper said that they may opt not to participate in
the “Dearly Departed” program. A couple of families have even
complained about the table, finding the reminders of death upsetting.

Rabbi Michaels recalled a few families who declined to hold memorial
services for deceased family members, because of the pain and sadness
they associated with the residence. That might be a mistake, he added,
suggesting that people don’t allow themselves the time to grieve these
days. “In long-term care of any nature, people need to know that their
life matters,” said Rabbi Michaels.

At Renaissance Gardens, the pastoral staff holds a collective
memorial service every six months. For residents who have been around a
while, “it gets a little harder to go,” said Ms. Harper. “They think,
‘That could be me next time.’ There is that awareness. But it’s so
meaningful to them, to see the reverence.”

My father’s neighbor Gerald died several months ago. It didn’t come
as a surprise. Gerald, constantly connected to his oxygen tank, didn’t
get around well. I never heard him speak, but he waved at passers-by
from his room, where the door always stood open. Because Gerald couldn’t
hear well, his television always blared the Giants game or “Jeopardy.”
My father requested wireless headphones for Father’s Day.

Read more of this article.

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.

Retirement plans: Does a 401(k) make more sense than a Roth IRA?

Posted on November 8, 2010 by Jason

Christian Science Monitor, November 8th, 2010

As I mentioned before, I’m going to publicly write and share
a rough draft of a novel during the month of November. It’s going to be
a rough draft, so expect it to be rough. Having said that, I also think
it’s going to be a solid read. More details on Wednesday, as I should
have a few thousand words uploaded by then.


Q1: Trust fund family problems
My
sister-in-law suddenly and unexpectedly passed away this summer. She
named her youngest sister, Mary, as the sole beneficiary of her life
insurance. Mary has made a lot of poor choices in her life. She has no
job, no education, no money, and no sense of responsibility. Now
suddenly she has $200,000.

My sister-in-law also left
behind an 8-year-old son, Bobby, who now lives with his dad. (They
divorced several years ago.) His dad recently remarried, and they have a
baby on the way. With Bobby to take care of too, money is extremely
tight.

The family believes my sister-in-law wanted to give Mary one last
chance to set her life straight and learn responsibility. Mary has
promised to set aside money for Bobby, but so far all she has done is go
on a spending spree and show off to her friends. The family is
concerned that she will just blow through the money. Is this where a
trust fund would be helpful? How can the family make sure there is money
left to take care of Bobby?
– Katie

If you’re asking for my opinion,
she’s probably going to blow through the money. If she were serious
about setting aside money for the boy, that would have happened before
anything else.

Now, what should you do about it? You can’t make
her do anything, but you can make it as easy as possible for her to
commit some portion of the money to a trust for Bobby. Assume that a
relatively small portion of the money will go into the trust ($20K to
$50K is what I’d assume), then get the paperwork drawn up yourself and
make it so that all she has to do is sign on the dotted line and
transfer the cash.

Make all of the decisions about the trust
yourself. Should it allow a certain percentage to be withdrawn each year
for Bobby’s care? Should it just sit until he reaches adulthood? Who
should be the trustee? That’s a personal decision within your family.

Having said that, I would not be shocked if she refuses to sign it, at which point I would assume Bobby won’t get a dime of it.

Read more of this article.

Shock of Gray

Posted on October 21, 2010 by Jason

Amazon.com, October 21st, 2010

Editor’s Note:  We have no citation to bring this time, simply a suggestion that you take a close look at this book.  Shock of Grey discusses the economic implications of an aging population and workforce and describes the manner in which we can expect the increase in age over time to reflect itself in the economy and in the world at large.  Drawing examples from the US, Spain, and Illinois, it maps the progress of aging into the future.  Recommend checking it out.

See more about this book

Redefining benefit plans

Posted on October 20, 2010 by Jason

The Baltimore Sun, October 19th, 2010

Imagine buying something without being told how much it really costs.
Worse, what you don’t know could ruin your finances: It could be the
difference between a comfortable retirement and savings that come up
tens of thousands of dollars short.

That’s not a hypothetical.
Tax-deferred 401(k) retirement savings accounts have been operating for
years without disclosing management fees and other charges made to
workers. On Saturday, the U.S. Department of Labor finally announced
rules requiring companies to give detailed information so consumers can
compare the cost of their choices.

Such fees may not seem like
much — a small fraction of investment costs. But as federal authorities
have pointed out, the differences can become huge when compounded over
the decades-long haul of retirement savings — the addition of a 1
percent fee can reduce retirement income by as much as 28 percent.

With
72 million U.S. workers already enrolled in 401(k) plans with assets
totaling $3 trillion, the fact it’s taken nearly a quarter-century for
the government to require such disclosure is outrageous. Financial
planners have long been lecturing people to make informed choices
regarding their investments, but that’s hard to do without detailed
information — preferably provided to them in plain English.

Read more of this article.

Retirement Calculator:  Keeping up with the fees on your 401(k) is just the beginning of ensuring that it fits into your overall retirement plan.  Our Retirement Calculator can help you keep tabs on what’s actually important.

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