Archive for the 'Politics and Legislation' Category

What to Expect from Obama 2.0

Posted on November 25, 2012 by Steve

After two years, a billion dollars, and altogether too much media coverage, the election is finally over.  President Barack Obama has been re-elected, and will preside over the next four years, during which time he and congress will have to grapple with such issues as continuing the economic recovery, implementing Obamacare, and dealing with the so-called “Fiscal Cliff” (a topic for another day).  But what does all this really mean to the average senior?  We’ve been inundated for months with promises that the President’s re-election will solve everyone’s problems, or dire warnings that it will result in the destruction of the country.  So what can we actually expect?

Predicting the future is an inherently problematic exercise, but the Huffington Post is willing to try it out.  The biggest issue it sees coming down the pipeline for seniors is that of Social Security and Medicare, and the changes that might well be coming along for it.  Despite the claims by both parties that the other want to destroy Social Security while they want to preserve it, the fact is that both sides are interested in altering the makeup of these entitlement programs, and Huffington’s article posits a “Grand Bargain” taking place between the parties to raise the retirement age while also increasing medicare and social security taxes, all to ensure that the programs are fully funded into the foreseeable future.  This is not a new concept. NewRetirement’s own Bud Hebler wrote that it might be wise to consider likely alterations that politicians will impose on the programs when designing one’s Social Security strategy, for example taking benefits at an earlier date if you have reason to believe your overall benefits will shrink due to new legislation.

There’s also Obamacare, the next wave of which is due to begin implementation over the next couple of years.  Love it or hate it, with the President’s re-election and the Republican party suffering heavy defeats in the senate, Obamacare is likely no longer at any risk of being repealed, and thus the alterations it has already wrought are here to stay.  Huffington cites the continued discounts that seniors will be receiving on prescription drugs, as well as a new basic package of health benefits the government will establish for sale from private companies starting in 2014, all of which will be available to seniors who wish to supplement their Medicare.  Some states will also be expanding their Medicaid coverage to low-income workers, including pre-retirees in their 50s and 60s.

Overall though, it doesn’t look like the script has changed much since last anyone looked at it.  Even the most incremental changes in Social Security or Medicare will be staggeringly complex events, unlikely to happen rapidly or by fiat.  Still, for seniors relying on these essential programs to help them in retirement, it never hurts to know what’s coming.

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Your HEALTH that May Be the Key to Your Retirement Security!

Posted on November 9, 2012 by Editorial Team

A 2010 study by economists James Poterba, Steven Venti and David Wise tracked the retirements of older Americans and health differences emerged at a significant determinant of retirement success.

The study, titled “The Asset Cost of Poor Health,” found that poor health was a common attribute of people who died with little wealth.  While many of these households had adequate income in their 50s and 60s, that same income was too low to handle health expenses as they aged.

Additional findings include:

  • Around 46 percent of persons die with virtually no financial assets.
  • Those in poorer health may retire earlier and/or work fewer hours than their healthier counterparts – giving them a smaller pool of assets when they retire.
  • Those with the smallest pool of assets died the earliest.

It appears that taking care of your health can have striking financial benefits – in addition to an improved quality of life.

However, whether you are in “peak physical condition” or not, there are additional safeguards you can take to improve your retirement finances – optimize your Social Security payments, look at home equity as a way to bridge income and expenses, purchase the best supplemental health insurance and consider ways to fund long term care.

RESOURCES

Very Small Cost of Living Adjustment to Social Security for 2013

Posted on October 26, 2012 by Editorial Team

This week, the Social Security Administration announced a 1.7 percent increase to Social Security payments, beginning in January, 2013.  This will be one of the smallest hikes since adjustments for inflation were adopted in 1975.

You can see the Press Release from the Social Security Administration here.

Social Security payments average $1,131 a month — a 1.7 percent increase amounts to $19 additional dollars.

Unfortunately, much of the increase could potentially be wiped out by other costs in the coming year – factors like:

  • Higher gas prices
  • Increased food costs due to the drought experienced by much of the country this year
  • Higher Medicare premiums (though these will hopefully be offset by fewer other out of pocket costs)

 

If these factors do increase inflation in 2013, then the Social Security adjustment for 2014 will hopefully be higher.

RESOURCES:

What Defines Old vs Young?

Posted on June 25, 2012 by Rohith

Wherever the line that defines whether you are ‘old’ or ‘young’ is, the individuals on either side end up looking very differently, in political and economical terms. According to a recent New York Times article, in 2004, older voters began moving right (politically), while younger voters shifted left. This year, polls suggest that Mitt Romney will win a landslide among the over-65 crowd and that President Obama will do likewise among those under 40. The split between the ages goes farther than politics; the two have different views on many of the biggest questions before the country. For example, the young favor gay marriage and school funding more strongly and are also notably less religious, more positive toward immigrants, and  less hostile to Social Security. On the other hand, the older crowd are less tolerant to immigrants and expect more out of Social Security.

Over all, more than 50 percent of federal benefits flow to the 13 percent of the population over 65; a portion of these benefits come from Social Security while a much larger from Medicare. However, contrary to common perception, most Americans do not come close to paying for their own Medicare benefits through payroll taxes. Instead, medicare, in addition to being the largest source of the country’s projected budget deficits, is a transfer program from young to old.

One aspect that both the ‘old’ and ‘young’ can agree upon is that they are more open to change and confident that life in the United States will remain good.

 

‘Booming’ Medical Costs

Posted on June 18, 2012 by Rohith

The medical costs for keeping the Baby Boomer generation in good health has, and will be, skyrocketing for the years to come. It is projected that there will be 15 million people with Alzheimer’s by the year 2050 – nearly triple the amount in present day. The cost of dementia care is also projected to shoot from $200 billion to $1 trillion in today’s dollar.

As a result, many people will begin taking in elderly relatives. According to a recent article from NPR.org, more than 50 million Americans reside in multigenerational homes. And in many of these households, middle-aged “children” are caring for elderly parents, as well as providing shelter for their own grown children.

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A Ban on Banks Trading for Their Own Profit

Posted on October 11, 2011 by Erin

Here’s some hopeful news!  Recently, the FDIC announced that it was supporting a proposed rule that would ban the practice of banks trading to make a profit for themselves instead of their clients.  Currently, banks can bet on a risky investment with their own money.  This was the problem in 2008 when the bets the banks chose failed and the tax payers were forced to bail them out.  The rule also helps to limit a bank’s investment in hedge funds – banks would no longer be able to own more than 3 percent.

Any regulations guarding against another financial crisis seems like a needed step – but of course, the proposed rule has its loop holes.  The banking industry is already complaining that the new regulations would be too confusing and complicated.  Others have pointed out stiff rules could stop them from buying and selling the investments that their clients are demanding. Barlett Naylor, a financial policy advocate for the group Public Citizen was quoted as saying, “The regulators are proposing that they will detect the difference between various trades by fishing through complex data provided by the banks after the fact.  This is an invitation for evasion.”

What do you think?  Is this going to help protect us from another financial crisis?  Or do you think it’s just a temporary fix that people can easily take advantage of?

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Wall Street Protests

Posted on October 4, 2011 by Erin

Three weeks ago, a movement started on Wall Street.  A loosely organized group of people from all different walks of life came to New York to stand up to what they describe as the corporate greed of financial institutions that is causing the high unemployment in the U.S.  By using social networking sites such as Facebook and Twitter, the movement is spreading to other parts of the country – rallies have been planned for Memphis, Tennessee, McAllen, Texas  and Hilo, Hawaii just to name a few.

The crowd consists of anti-capitalists, anarchists, students, parents, business professionals who have been laid off and have no current job options and military members who are facing a bleak future.  The protests may have been loosely planned, but the message is getting out in mass.  People are tired of the current economic situation and are ready to fight.  Between unemployment, tax payer bailouts, astronomical student loan debts and retirement funds being eaten away, it seems that no one is immune from the problem.  Do you think the demonstrations will have an impact?  What do you think it will take to get the attention of the government and corporations?

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Proposed Increase to the Retirement Age

Posted on September 22, 2011 by Erin

Do you think Social Security will be around for your children or grandchildren?  Senator Tom Carper of Delaware was quoted as saying, “My sons are 21 and 22; neither of them thinks Social Security is around for them.  I want to make sure that it is.”  But how?  Obviously if we knew how to answer this question, it wouldn’t be such a debate!  But the U.S. government has come up with one proposal that is gaining steam – increasing the retirement age.

The current retirement age of 66 was originally set because of the way Americans worked in the early 20th century.  Many of the jobs were factory and other blue collar jobs that were rough on the body.  As time continued and these jobs moved out of the country, Americans made the switch to less physically demanding and more mentally challenging jobs.   Because of the switch, more Americans began living longer lives and had the ability to continue with their jobs for a more years than the physically demanding jobs.  The most popular plan among lawmakers is increasing the retirement age slowly over time.  By year 2050 the proposed retirement age would be 68 and would  increase to 69 by year 2075.  If this becomes reality, the change would affect those born after 1982.  Do you think that an increase to the retirement age is the answer to helping our economy and Social Security?

You can read more about this topic, here.

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Now What?

Posted on August 2, 2011 by Erin

So, the debt deal has been made, but what does it all mean?  Especially for seniors?  It all seems to still be up in the air.  The bill that was signed into law this week will cut $917 billion in cuts over 10 years, mostly in security and defense spending.  A bipartisan committee has been formed and given the task of finding another $1.5 trillion in cuts in spending by December 23rd.  If they do not find approval or simply cannot come up with the cuts, automated cuts will begin to be triggered.  Where are those cuts coming from?  Medicare seems to be a likely candidate for deep cuts.

So what can you do to protect yourself?  One way is to carefully watch your stocks that involve government financing such as defense and government contractors.  These contractors will likely lose business due to budget cuts in their sectors.  Another tip is deferring your Social Security benefits.  It’s been estimated that for every year you hold off on taking Social Security, you benefits rise by almost eight percent.  And lastly, take advantage of tax deferred retirement savings accounts!  You can read more tips here.

Read more about Social Security benefits and when to begin taking them, here.

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Would a U.S. Default Mean Less Retirement Savings?

Posted on July 26, 2011 by Erin

The world is waiting to see what the U.S. government will do in the upcoming days regarding a possible default.  Today, the Assistant Secretary of Labor, Phyllis Borzi announced that for retirement plans such as IRA’s and 401ks, a U.S. default would be “very, very disruptive.”  Why is this?  According to Borzi, the likelihood of investors wanting to invest would greatly decline due to fears that they would not be able to easily access their money due to withdrawal restrictions.  Pension funds would also be greatly affected because most of them are required to hold AAA bonds and U.S. treasuries.

Are you worried about your retirement funds if the government defaults?  What are your thoughts on the situation?

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