Question: What do the Main Street retiree and the overpaid Pro Athlete have in common?
Answer: Poor financial planning
AmericanBanker.com reported this week that many National League Football players — who will collectively make $4 billion this season — make poor financial choices.
In fact, statistics show that MORE than 70 PERCENT of professional athletes are financially challenged or bankrupt within three or four years of retirement.
Amazingly, perhaps the Main Street retiree is better off — but only marginally so. Research Institute (ERBI) conducted a retirement survey in conjunction with the American Savings Education Council and Mathew Greenwald & Associates. The report found that 45 percent of all U.S. households have less than $25,000 in assets excluding their home), yet two-thirds of all workers expect to live as comfortably in retirement as they did when they worked. The reality is that the average person would use up that $25,000 in two or three years – even with their Social Security benefits.
What to Do?
Given their celebrity status and affluence, the football players are working on solving the problem. In 2007 the pro football union started a program to help players evaluate financial advisors — helping them find advisors with adequate training, knowledge and prudence.
But what about the Main Street retiree? NewRetirement.com has many tools to help the average investor assess their own retirement plans. The Retirement Action Planner will identify products and strategies to extend your retirement finances and also offers a service to match you to a prescreened Financial Advisor.
But what is the ultimate financial advice for the NFL player and the average retiree? Go long*!
* Plan for living a long time and providing adequate resources for that long life.
Yesterday Congress passed an extension to the $625,000 national loan limit for reverse mortgages through December 31, 2010. If Congress had not passed this extension then loan limits for the Home Equity Conversion Mortgage (HECM), or reverse mortgage, would have returned to $417,000 at the end of the year.
According to the Center for Retirement Research at Boston College, more Americans than in the past are at risk of failing to maintain their living standards in retirement. The Center just recently revised their National Retirement Index, a measurement that reflects American housing, changer in Social Security benefits, and household’s financial assets to determine retirement preparedness. The new Index reflects that 51% of Americans will not be prepared to retire at 65, up from the 2007 number of 44%.
While you may think these numbers are surprising, Paul Ballew, Nationwide Mutual’s senior VP of customer insights and analytics says that if we included the cost of health care and/or long term care in the Center’s Index, that number could jump up to as a whooping 70%. Remember, never forget about retirement planning, your future is too important not to! Use a trustworthy retirement calculator to ensure that you can not only retire on time but have enough money to last throughout retirement.
Just recently and here in San Francisco five social innovators in Encore Careers over 60 years old received $100,000 each in Purpose Prizes. Additionally, five social entrepreneurs each won $50,000 “. . . for using creativity and experience to solve long-standing social problems.” Marc Freedman, the co-founder of The Purpose Prize notes, “It’s reassuring to note that as America ages, we have creativity in greater abundance in greater abundance. Purpose Prize winners show that experience and innovation can go hand in hand, that inventiveness is not the sole province of the young.”
This Purpose Prize program is the nation’s only venture in assuring the continuation of social innovators who are in the second half of life. Over its six years it has provided $17 million in prize money to the 60 year old+ groundbreakers from all over the United States. The five 2009 $100,000 winners include:
- A 68 year old doctor and special education teacher couple who treat victims of terrorism around the world
- A 73 year old engineer who creates “green” bricks out of fly ash, the residue of coal-fired power plants
- A 61 year old telecommunication executive from Rutherford County, N.C. who delivered broadband to his home county and produced an online ordering system that allows local farmers to sell produce directly to Charlotte restaurants
- A 69 year old psychiatrist who recruit mental health professionals to provide counseling to military veterans, active-duty service men and women, and their families
- And last but not least a 66 year old computer executive who generated a nationwide substance abuse recovery program based on Native American beliefs and traditions.
To see the other winners of the Purpose Prize or to learn more about the program please visit encore.org. NewRetirement wants to congratulate this year’s winners for their hard work, determination, creativity, and noble action in making the world a safer, cleaner, more productive, and better place. They should serve as role models to us all. Please provide us with some other 60+ people you know who are seeking to tackle social problems facing their community, country, or world.
Forbes just recently announced a top 40 list of the top American recession –proof cities to retire in. Forbes used such factors as average income, current and expected home prices through 2014, job-growth predictions through 2014, and the cost of living and median monthly housing cost. Also, Forbes used the number of sunny days in their calculations; a factor I believe holds no value for how recession-proof a city may be. Nonetheless, Atlanta, Dallas, Tampa, Houston, and St. Louis rounded out the top 5, and New York City and outlying areas came in at surprisingly the 40th spot. For a complete list visit Forbes.com.
The Seattle Times reported Sunday on this year’s federal deficit of $1.42 trillion:
“It’s more than the total national debt for the first 200 years of the republic [cumulative], more than the economy of India, almost as much as Canada’s, and more than $4,700 for every person n the United States.”
And that’s just for one year!!!!! Just watch what will happen during the next decade!!!!
NewRetirement’s Advisor Bud Hebeler of AnalyzeNow.com was just featured in a New York Times Article titled “To Retire in This Weak Market, the Magic Word Is ‘Focus’” that discusses some very interesting and important approaches for retirement preparation. There were quiet a few great takeaways from this article of which I will include two below.
While planning for retirement it is always important to set goals for your future, and the article brings up some clairvoyant questions you must ask yourself. “The first question assumes you have all the money you need –how would you live your life today? In the second, you are told that you have five years to live: what would you do with that time? And the final question aims right at the heart. You have 24 hours left on earth –what did you miss? Whom did you not get to be?” These questions allow you to step back for a minute and decide what is vital to your future, which in many cases does not have to do with financial concerns. Once you can decide what you truly want out of life, then you can set out the course for a retirement plan that will help you meet your goals.
Mr. Hebeler’s advice is also very insightful because retirees rarely budget for wear and tear items. If you put in the expenses for replacing or repairing cars, air conditioners, and your home, then you will have a much clearer picture of your necessary retirement finances.
Social Security beneficiaries will not receive a Cost of Living Increase next year for the first time in over thirty years, causing President Obama to seriously consider sending senior beneficiaries another round of $250. The Cost of Living Adjustment- or COLA- is not increasing because it is linked with falling consumer prices tied to inflation, which is negative this year due to falling energy prices. The $250 payments would most likely be sent to 57 million seniors and would account for around a 2 percent increase for the average Social Security recipient, which would cost the government between 13 and 14 billion dollars. How this money could be financed is up to Congress to decide. Aside from a possible $250 check from the government, check out other ways to optimize your social security.
From the AP – - After raising 401k contribution limits $1,000 to $16,500 for 2009, the IRS has just announced that 401k contributions will remain stable at that amount for 2010. The maximum contribution is established by using a formula tied to the third-quarter Consumer Price Index for all urban consumers — the CPI-U, which measures the average change in the prices of goods and services including food, clothing, shelter, fuel, drugs and other day-to-day items bought by U.S. urban consumers. This year the CPI-U fell 1.3 percent over the past 12 months. Accordingly and in theory, the IRS could have lowered maximum contribution limits; however, and luckily the law does not allow for a decrease in contribution.
The IRS also declared it was keeping many of last year’s tax deductions, some of which also are determined by inflation figures.
Several deductions for 2010 are unchanged and others change slightly. They include:
- The value of each personal and dependency exemption available to most taxpayers is $3,650, unchanged from 2009.
- The new standard deduction for heads of household is $8,400, up from $8,350 in 2009. For other taxpayers, the standard deduction remains unchanged at $11,400 for married couples filing a joint return and $5,700 for singles and married individuals filing separately. Nearly two out of three taxpayers take the standard deduction rather than itemizing deductions, such as mortgage interest, charitable contributions, and state and local taxes.
- Various tax bracket thresholds will see minor adjustments. For example, for a married couple filing a joint return the taxable income threshold separating the 15 percent bracket from the 25 percent bracket is $68,000, up from $67,900 in 2009.
- The annual gift tax exclusion remains unchanged at $13,000.
California Governor Arnold Schwarzenegger, more or less fondly known as The Governator, signed seven mortgage finance-related bills into state law this past Monday. These laws are designed to cut down on fraudulent mortgage practices.
Senate Bill (SB) 36: regulates the licensing requirements for residential loan originators in compliance with the federal Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act.
SB 237: requires appraisal management companies (AMCs) and appraisers register with the Office of Real Estate Appraisers and subjects appraisers to the provisions of the Real Estate Appraisers’ Licensing and Certification Law.
SB 239: raises the crime of mortgage fraud from a misdemeanor to a felony and makes it easier for prosecutors to obtain fraudulent loan documents to investigate cases.
Assembly Bill (AB) 260: places restrictions on subprime loans and prohibits originators from “steering” borrowers, or encouraging borrowers to buy riskier loan products when they are eligible for affordable products. It also gives state regulatory agencies the authority to suspend or revoke the licenses of real estate lenders and mortgage brokers that violate the state’s lending laws.
AB 329: sets guidelines for reverse mortgages originated for elderly borrowers — those over 65 years old — requiring specific disclosures and offering counseling service referrals. Originators are also prohibited from selling other financial products to a reverse mortgage borrower.
AB 957: gives the buyers of foreclosed property the right to choose local escrow officers to complete transactions. It prohibits the seller of a residential property from requiring the buyer to use an escrow service company or purchase title insurance chosen by the seller.
AB 1160: requires originators to provide borrowers with a mortgage summary document translated in the language the contract was verbally negotiated.
