The Best Life
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Billions in Social Security Not Being Claimed
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Married couples are leaving nearly $10 billion on the table that they could be claiming from Social Security each year, according to a new study by the Center for Retirement Research at Boston College. "Strange But True: Claim Social Security Now, Claim More Later" describes how husbands and wives could increase their benefits by using Social Security's spousal benefit provision. A Social Security Administration spokesman confirms that CRR's strategy is valid. But the process is complicated, so pour yourself another shot of java or gingko biloba or whatever perks you up. Here goes:
Married individuals are allowed to begin claiming Social Security retired worker benefits as early as the age of 62. If they delay receiving benefits, the amount they get will rise by seven to eight percent a year every year, topping out at the age of 70 (this is in addition to annual cost-of-living increases in benefits). Before then, people reach what Social Security calls the "full retirement age," (FRA) which is 65 or 66 for most folks. When you reach FRA, any outside earnings you have do not reduce your Social Security benefits. Prior to reaching the FRA, such earnings can take a big bite out of your benefits. (Here's some more background on the FRA and outside earnings.) -
Sandwich Generation Squeezed by Downturn
Continue reading… 6 CommentsThis recession is hard on everyone but takes a particularly brutal toll on the sandwich generation. According to Caring.com, nearly half of the people providing some form of in-home care for their parents also supported them financially. Average out-of-pocket spending is more than $5,500 a year. Caregivers are worried that they will have to provide additional support because of the weak economy and retirement funds that have been badly hurt by the stock market's decline.
Caring.com, an ad-supported web site that provides advice and support to family caregivers, says the economy is hurting the retirement plans of both generations. "For baby boomers that are caring for their parents, the caregiver role affects their marital relationship and physical health, and now, because of the stock market crash, it's having an even greater impact on their finances," CEO Andy Cohen said. -
30 Steps to Financial Health
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Frugality has become a lifestyle. Millions of people in retirement are choosing it today; millions more have always had to live this way. Whether by choice or necessity, living a more austere life requires sound planning skills and real discipline. It's not easy and they don't give out Academy Awards for Cheap. Even to Baby Boomers.
The financial industry does, however, shower us with inducements and apparent rewards for financial over-indulgence. This helps explain why President Obama dressed down the credit card companies last week. And why many of us are forced into debt consolidation and counseling programs. And, lastly, why seniors in particular continue to be stalked by financial predators. -
Tough Decisions: Providing Care for Aging Parents and Relatives
Continue reading… 61 CommentsThe Boomerater™ Report, our weekly collaboration with Boomerater, deals this week with some tough decisions that family members confront in taking care of aging parents and relatives.
Q. I am trying to decide between a retirement/assisted living facility for my mother or hiring in-home care for her. Anyone have advice? Also, what's best way to find a quality assisted living community?
A. There are a lot of factors to consider, including: Is your mother willing to move or does she want to stay in her home? Do you have access to quality in-home care? Is there a good assisted-living community near her or you? What is the financial situation? How is her health and do you anticipate she may need more care as time goes on? If you decide on assisted living, I encourage you to look at a Continuing Care Retirement Community (CCRC). She can move from independent to assisted living, and if necessary, to a full nursing home without leaving the community or the friends she will meet there. Moving once is hard enough, but having to move again for health reasons is very hard for many people. Also, CCRCs tend to have a whole range of activities and outings for your mom to chose from to get her involved in her new community.
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5 Tips For Investing in TIPS: Treasury Inflation Protected Securities
Continue reading… 9 CommentsTIPS—short for Treasury Inflation-Protected Securities—offer investors the closest thing Uncle Sam has to a sure bet these days. These bonds have the full backing of the U.S. government and provide investors with returns that will keep pace with future rates of inflation, as measured by the U.S. Consumer Price Index. You can buy them directly from the government, but it's easier—and a better investment decision in many cases—to buy low-fee investment funds that hold TIPS.
Many advisers are recommending TIPS, both for their safety and because of widespread concern about the inflationary implications of record government deficits. Investors burned in last year's market declines have become more cautious about their holdings and are particularly wary of risky investments as they near or reach retirement age.
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Target Retirement Funds Continue Losses
Continue reading… 0 CommentsTarget retirement funds posted their sixth consecutive quarterly loss in the first three months of 2009, according to Morningstar. While their average loss of 7.4 percent was less than the 11-percent drop in the S&P 500 index, that provides little solace to retirement-plan investors who expected little risk when the use of retirement date funds was expanded sharply a couple of years ago. The funds are structured to meet the needs of people throughout their lives, automatically adjusting to more conservative holdings as people near retirement. A 2010 target date fund, for example, is designed to meet the needs of someone turning 65 next year.
As market values plummeted throughout 2008, big losses at many retirement date funds led to intense criticism of the funds and the mutual-fund companies operating them. Many of the funds continued to hold large shares of their assets in stocks even as their target investors reached retirement age. Congressional hearings have led to legislative proposals to change the way the funds operate or even to introduce a new category of retirement fund with government oversight and not under the control of the fund industry.
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Free Retirement Planning Software Now Online
Continue reading… 1 CommentESPlannerBASIC, a free online version of a powerful financial-planning service, has just been developed. Now that the investment dust and damage of the past 18 months is settling, this is an excellent time to take an honest look at your financial future. ESPlannerBASIC is financial planning software that's worth your time and effort.
Even the free version of this tool is no lightweight. You will need to devote a good half an hour providing the information requested by the interactive tool. But it can be very helpful in telling you where you stand in ways that lots of other financial-planning tools do not. Developed by economist Laurence Kotlikoff at Boston University, ESPlannerBASIC is based on a philosophy of "consumer smoothing." It doesn't just tell you how much money you need for "retirement" (whatever that is, these days). It tells you how much you should spend and save every year, and shows you how lifestyle decisions will raise or lower your standard of living. -
Note to Brain: Get Down and Give Me 50!
Continue reading… 20 CommentsWhat's your dementia defense? Mine is the Daily Jumble in my newspaper. When I can quickly rearrange the five-letter and, especially, the six-letter jumbled letters into words (real ones, mind you), I am confident of taking on whatever life has to throw at me that day. And if I do poorly, which I do with regularity, it's like seeing my shadow on Groundhog Day. Back into the cave.
Whether we admit it or not, nearly everyone on the north side of AARP membership age has senior moments and concerns about their mental acuity. It doesn't help much that the fear of Alzheimer's Disease has been seized upon by Big Pharma and conveyed with what seems to be incessant frequency in commercial messages for various pills. I believe in free enterprise; I really do. But I just don't like how the drug companies prey upon our fears. I don't know anyone who does.
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Boomerater™ Report: Buying a Hybrid Car
Continue reading… 0 CommentsThe Boomerater™ Report is our weekly collaboration with Boomerater. Boomerater is an online resource for baby boomers that covers topics such as finding a financial planner and searching for the perfect place to live. The site also contains forums where boomers can post questions and swap first-hand experiences.
In each report, we feature a Best Life question of the week on Boomerater for which we are looking to hear your advice and tips. This week, we would like to know if you have loaned or borrowed money from a family member because of the recession. Do you have any thoughts or advice for others? Go to Boomerater.com to share your story, and in the next report we will feature some of the responses.
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5 Big Financial Changes for Retirees in 2010
Continue reading… 58 CommentsRetirees should start getting ready now for major changes next year that will affect their income and health expenses. The precise impact of these changes will vary by individual, so consumers should take stock of their financial situations and plan accordingly. Many economists say inflation will be a serious concern in a few years after the economy recovers, so factor this into plans as well. Here are five things to look out for:
No cost-of-living boosts for Social Security. Forecasters widely predict that a slowly recovering economy will produce little or no inflation in the near term. That's generally good news, but not for Social Security recipients, whose annual increases are tied to consumer price changes in urban areas. Health care, a major retiree expense, is not expected to see the same price moderation as will other sectors of the economy. So it's quite possible that Social Security beneficiaries will be seeing flat payments, but still face higher prices.
