Planning to Retire
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Can You Afford Long-Term-Care Insurance?
Continue reading… 33 CommentsLong-term care is likely to be most Americans' greatest expense of all in retirement. A private room in a nursing home costs $76,460 annually on average, or $209 a day, and Medicare typically won't cover it.
Long-term-care insurance can help protect you from some of these unpredictable costs. It can be used to pay for nursing home expenses, adult day care, and in-home help for seniors with chronic conditions or who need extra help recovering from an illness.
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8 More Ways to Save in Retirement
Continue reading… 4 CommentsWhile researching this article about how to be frugal in retirement, I asked Rich Gray, author of The Frugal Senior: Hundreds of Creative Ways to Stretch a Dollar and the editor of FrugalWorld.com, to share his favorite money-saving tips for retirees. Here are some that Gray E-mailed to me:
Keep a spending diary. Write down everything that you buy, no matter how small. At the end of the month, go through it and add up all like items to get a good picture of where your money goes. If you do this for several months, modifying your spending as you go, you'll be pleasantly surprised at how much your spending shrinks over time.
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Finding a New Job After 50
Continue reading… 10 CommentsHard work and being a team player may not be the qualities that get you your next job, according to Jack Heyden, a partner at the aptly named Gray Hair Management, a networking firm for older workers. The key to getting a new job after middle age is to explain how your past job performance improved the bottom line of the company, says Heyden, who was president of a banking association for 13 years until he was laid off in 1999 as part of a merger at age 53. He is the coauthor of Winning the Job Race: Pathways Through Transition with his equally gray-haired partner, Scott Kane. I called Heyden at his Deerfield, Ill., office to ask him what advice he has for older workers who find themselves suddenly jobless in a slow economy. Excerpts:
If you find yourself unexpectedly laid off after age 50, what should you do?
You have to take a quick step back and evaluate yourself in terms of professional strengths and weaknesses as a person. Articulate your value by putting together the paperwork necessary to go out and get a job—a résumé. Most people, they don't do a very good job of articulating their value. In order to do that, you have to look back at the jobs you've had and figure out what you did that added value to the business you worked for. Too often people [give] their job description rather than the end results they were able to deliver. -
The Economy Slows, but Some Save More for Retirement
Continue reading… 2 CommentsYou'd think rising gas and grocery prices might cause workers to skimp on their 401(k) contributions. But that's only half correct. The faltering economy has some Americans saving less and others tucking away more for retirement. At least that's the confounding result of a new survey.
While it's unsurprising that 15 percent of people in IRAs and workplace retirement plans have lowered their contributions and 73 percent kept theirs the same, a surprising 16 percent say they have actually increased the amount they're saving as a result of the current economic downturn, found a Bankrate.com survey of 1,004 adults done by GfK Roper Public Affairs & Media.
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Avoiding Bankruptcy in Old Age
Continue reading… 7 CommentsMore than a million Americans found themselves unable to deal with their debts last year and filed bankruptcy. Older Americans on fixed incomes are often hit hardest by debt. People 55 and older accounted for 22 percent of all those in bankruptcy proceedings in 2007, up from only 8 percent in 1991, according to a new AARP Public Policy Institute paper.
Bankruptcy rates generally dropped after the bankruptcy law was amended in 2005 to make declaring yourself insolvent more difficult. But "the financial condition of seniors is serious enough that they are going bankrupt anyway," says University of Michigan Provost Teresa Sullivan, a coauthor of the paper. For most people who declare bankruptcy, she believes, "it's not the case that they have done something wrong. It is that something has happened to them that they didn't foresee."
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Traditional Pensions Net Higher Stock Market Returns
Continue reading… 2 CommentsDuring the bull market of the late 1990s, 401(k) plans outperformed traditional pension plans. But this decade has brought a reversal of fortune: During both the 2002 bear market and the 2003-2006 bull market, traditional pension plans outpaced 401(k)'s, according to an analysis by consulting firm Watson Wyatt Worldwide.
The study of companies with both a defined-benefit (traditional) retirement plan and a 401(k) plan found that traditional pension plans beat 401(k) results by 1.6 percentage points in 2006. Money invested at the start of the 12-year period from 1995 through 2006 was worth nearly 14 percent more in the traditional pension plan, Watson Wyatt found.
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Stories of Unplanned Retirements
Continue reading… 0 CommentsSudden illness or a layoff can instantly change your retirement plans. I've been writing about how some retirees and older workers coped with health problems, job loss, and care-giving responsibilities. Here's a recap of the stories told so far:
- Forced Into Early Retirement From Corporate America
- Cutting Back on Work to Take Care of Mom
- Second-Career Plans Scuttled by Illness
- Retiring Into an Uncertain Job Market
- Keeping Busy to Ward Off Alzheimer's Disease
- Picking Out a Job for the Pension
- When Illness Ambushes Retirement Plans
If you'd like the story of your unplanned retirement featured in an upcoming post, please write me at retire@usnews.com. Include your phone number. Or you can discuss your story in the comments section.
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Sudden Illness Caused Paulette Geller to Retire Young
Continue reading… 0 CommentsPaulette Geller, 64, planned to work until 66 or 67, to boost her Social Security check. (Social Security benefit amounts are based on a person's top 35 years of working income and increased for each year one delays claiming up until age 70.) Then, after successful foot surgery, she was being wheeled to her car to go home when she had a stroke.
The stroke caused Geller to lose some technical skills and vision, keeping her from continuing to work as program director for older adults at the Winter Park (Fla.) Health Foundation. "I honestly thought I wasn't going to ever stop working. I was going to cut back to half time or quarter time because I loved my job," Geller says. Suddenly, "I couldn't do my job anymore, but it wasn't on my timeline and I wasn't in control."
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Carrying Mortgage Debt Into Retirement
Continue reading… 4 CommentsI was brought up with the wisdom that paying off your mortgage as soon as possible was the surest way to accumulate wealth. But a new study says there is no longer a stigma to carrying mortgage debt into retirement, at least for folks with plenty of money.
A survey of 500 affluent baby boomers born in 1948 by investment management firm Bell Investment Advisors found that 55 percent who have both mortgages and investable assets of at least $1 million do not plan to pay off their mortgages until their 70s, if ever. "Contrary to conventional wisdom, mortgages can actually be a wealth-building tool for boomers throughout their retirement years," says Jim Bell, founder and president of the company.
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Picking Out a Job for the Pension
Continue reading… 0 CommentsWhen Luann Alshiemer, 49, of Utica, N.Y., chose to become a police officer, she was already thinking about the retirement options. She would be eligible for a full pension after 20 years with the force. "People thought I was crazy when I took the job at the police department," Alshiemer says. "I saw my parents live paycheck to paycheck, and having seen that, I think you really have to think jobwise about retirement and what you are going to do."
That foresight paid off when Alshiemer started getting severe migraines that forced her to retire in early 2004 at age 45, at which time she was eligible for the full pension. "My doctor didn't really give me much of a choice," she says. It took her a tumultuous year to get the migraines under control and also take care of her mother, who had developed cancer.
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Older Workers Find 'Encore Careers' Helping Others
Continue reading… 0 CommentsThe most common jobs for people who work after age 65 are in the retail industry. But a survey released today says that baby boomers are changing that stereotype by finding jobs that not only pay the bills but provide personal meaning and have a social impact.
A telephone survey by the MetLife Foundation, Civic Ventures, and Peter D. Hart Research Associates found that almost 10 percent of those between the ages of 44 and 70 are already in "encore careers" that provide them with a sense of purpose and accomplishment—a figure the researchers estimate translates to between 5.3 million and 8.4 million older workers. Typical fields include education (30 percent), healthcare (23 percent), government (16 percent), nonprofit organizations (13 percent), and for-profit businesses that serve a public good (9 percent).
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Keeping Busy to Ward Off Alzheimer's Disease
Continue reading… 4 CommentsJim Cook, 57, of Lincoln, Neb., had a 28-year Air Force career and then worked as a guest lecturer for the University of Nebraska. But little by little, important memories that he needed to do his job started to elude him. "My personal stigmatization was not being able to remember people's names. Fifteen minutes into the conversation, I would forget someone's name," he says. "I was less able to manage the small details that were so fundamentally crucial to my being able to do the work."
Cook's job performance reviews began to steadily decline. Eventually, "I was kind of forced into retirement three years ago," Cook says. "At the time, I thought it was just a matter of office politics. A lot of us lose our jobs." But then came the medical diagnosis: Alzheimer's disease.
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Retiring Into an Uncertain Job Market
Continue reading… 4 CommentsMany people forced or enticed into retirement earlier than planned have to find a new job to "cheer up your 401(k)," as Susanne Johnson, 62, of Long Grove, Ill., puts it. When she was 56 in 2002, Johnson accepted an early retirement offer from United Airlines. The airline was going into bankruptcy and the retirement plan was underfunded, so she was afraid she would get nothing if she didn't retire. The package included inexpensive health insurance until she became eligible for Medicare, free or low-cost flights when space is available, and a reduced pension. "You can't live at the level that we're living at on it," Johnson says of the pension.
Johnson then got another job doing information-technology procurement for a bank but was laid off in a merger when she balked at relocating. Johnson would like to work until age 66, when she can get her Social Security "full boat," but for now she's networking and job hunting. At job interviews, "every situation I am asked about I have already faced in my career," Johnson says. "I [would] bring a lot of knowledge to the company that a lot of people in their 20s don't have."
This blog post is part of an ongoing series of stories about people who retired while they were making other plans. If you'd like the story of your unplanned retirement featured in an upcoming post, please write me at retire@usnews.com and include your phone number. Or you can discuss your story in the comments section.
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Second-Career Plans Scuttled by Illness
Continue reading… 1 CommentSpencer Johansen, 50, a small-town police chief in Lexington, Ill., wanted to open a barbershop once he became eligible for his pension at age 55. But his plans changed in August 2006 when he was diagnosed with early-onset Alzheimer's disease. For now, he is continuing his work as police chief and wears a Palm organizer on his belt while in uniform to help him remember appointments. A neuropsychologist keeps close tabs on the progression of his disease. But Johansen knows he will be forced to retire when he becomes unable to do his job. "I guess it's not a rosy picture of retirement," he says. "There's no way to prepare for the possible diagnosis of any disease."
Johansen will take in half his current income from disability insurance payments and Social Security disability when he retires. But that will do little to finance college for Johansen's youngest daughter, who will be a freshman at Lincoln Land College in Springfield, Ill. He also recently moved into the four-bedroom home of his wife's family so he and his wife could sell their house.
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Cutting Back on Work to Take Care of Mom
Continue reading… 0 CommentsJanie Scott, 60, an occupational therapist in Columbia, Md., has scaled back her work hours and accepted lower-paying jobs so that she can spend more time taking care of her mother, who has mild cognitive impairment, in Naples, Fla. Her caregiving requires Scott to travel south at least once a month, which not all employers are willing or able to accommodate. "I can't have a five-day-a-week, traditional job," she says. "Because of [my mother's] health situation, the work that I do needs to be very flexible."
Now Scott accepts teaching and writing assignments related to occupational therapy, such as instructing fall-prevention classes at her local senior center one day a week and writing book chapters. "It's a real challenge to find work that is relevant to my years of experience," she says. Scott knows it's important to have a high income in the years leading up to retirement so that her Social Security checks will be larger, but she's having trouble finding work that pays at the level she's accustomed to that is also flexible enough for frequent visits to see her mother.
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Forced into Early Retirement from Corporate America
Continue reading… 0 CommentsJohn Watson, 56, was an international telecommunications manager for DuPont in Wilmington, Del., until he was forced into early retirement three years ago. "There's a homeostasis when you've got a job and a paycheck and you're comfortable, and you just kind of assume it's not going to happen to you," Watson says. "It really comes without warning." Although it wasn't his choice,Watson was given one year's salary and 90 percent of his pension to retire. He's eligible for health insurance through his wife, Janice, who still works at DuPont. After leaving the company, Watson searched for a new job with a comparable salary. "I sent out 23 résumés and got turned down 23 times," Watson says. But, he admits, "I wasn't too anxious to go back to work for corporate America."
Instead, Watson started his own cabinetmaking and custom furniture business, Watsons Woodworking, in his 2 ½-car garage. "I think it is an incredible freedom compared with corporate America, where you are constrained by meetings and teleconferences," says Watson of running his own business. "My hope was that I will make enough money to fill in some gaps for the next five or 10 years."
Watson doesn't bank as much dough as he did during the DuPont days, but he enjoys the creativity of cabinetmaking. And he has some advice for those who find themselves unexpectedly retired: "If you are in a couple, try to live off one salary, so if one person loses a job, you can recover quickly and you can go with the flow."
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Unplanned Retirement
Continue reading… 0 CommentsThe title of this blog is Planning to Retire. But retirement is something that can happen while you are making other plans. Over three quarters of people who were 51 to 61 years old in 1992 lost their jobs, became widowed or divorced, developed new health problems, or were confronted with frail parents or in-laws within a decade, according to an Urban Institute analysis. Any of these circumstances can take a bite out of retirement plans, if not force workers to scrap them altogether.
Each day for the next week I'm sharing the story of someone who retired earlier than planned. If you'd like your unplanned retirement story featured in an upcoming post, please write me at retire@usnews.com and include your phone number. Or you can discuss your story in the comments section.
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Working After Age 62 Can Affect Social Security Payouts
Continue reading… 25 CommentsDear Planning to Retire,
I make about $45,000 per year. Should I start drawing Social Security even if I have to give half of it back? I just turned 63. I still am working and will probably work for another two years.
If you collect Social Security and earn a certain amount of money by continuing to work, some and possibly all of your benefits can be withheld. But you don't lose those benefits forever. At your full retirement age—for you it's age 66—your benefits will be recalculated to a higher amount. But, in your case, because you are earning well above the earning test limit, the amount is the same as what you would have earned simply by delaying claiming, according to calculations by Hugo Benitez-Silva, an associate professor of economics at the State University of New York at Stony Brook.
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No Surprise: Boomers Don't Want to End Up in a Nursing Home
Continue reading… 3 CommentsIf I ever got sick, I think I'd like to be at home with my family. The other option for long-term care is, of course, paid caregivers. But if baby boomers of means have their way, they will be taken care of by a combination of the two, a new survey found.
Some 49 percent of adults between 50 and 70 years of age want to be taken care of at home by both family and professionals, according to a Lincoln Retirement Institute and Mathew Greenwald & Associates online survey of 1,011 adults with household incomes of at least $75,000 or total household financial assets of over $250,000 (not including the value of a home or other real estate). The rest of the boomers preferred long-term care at home with professionals only (35 percent), a nursing home (8 percent), and at-home care with family only (7 percent).
Tell me, who would you like to take care of you in your final days?
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Slashing Expenses Can Make Your Nest Egg Last Longer
Continue reading… 0 CommentsRetirees don't have to commute, dry clean expensive work clothes, or live in a pricey suburb or city just because it's near work. So right off the bat, you can downsize a few major expenses. And if you're lucky, the kids are out of the house and supporting themselves, so you might be able to get by with a smaller house or condo. Here are some other ways retirees are cutting back in retirement to save money, according to a Thrivent Financial and Action Market Research telephone survey of Americans age 60 to 74.
- Giving fewer or smaller gifts to family members (37 percent)
- Traveling less or closer to home (37 percent)
- Shopping more often with coupons or at sales (36 percent)
- Eating out less often or at less expensive restaurants (32 percent)
- Living in a smaller house (18 percent)
- Walking, bicycling, or taking public transportation (15 percent)
- Moving in with children (3 percent)
Source: Thrivent Financial, 2008.
Retirees, how are you cutting back?
