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… 41 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… 10 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… 0 CommentsESPlannerBASIC, 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… 21 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… 33 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.
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Does a Family Loan Make Sense for You?
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Banks may not be lending money these days but friends-and-family loans might just be a recessionary growth industry. Such loans, formally structured and documented like bank financing, also can be a flexible tool to allow older homeowners to work with children to tap equity in homes they do not want to sell at today's depressed prices. Interest rates and fees can be sharply lower than loans arranged through a bank or other financial institution. And terms can be customized. Want an 11-year mortgage? No problem here.
Wealthy households have long used lawyers or accountants to fashion these deals. Now, the internet has spawned online services providing comparable packages for families of more modest means. Virgin Money, generally seen as the leading provider of such loans, began life early this decade as Circle Lending, and was relaunched in its current form in 2007 after British entrepreneur Sir Richard Branson bought a majority of the company. It's done about $400 million in inter-family and other "social" lending to date, with half of that during the past two years. -
Do You Know Social Security Earnings Rules?
Continue reading… 80 CommentsIf you've joined the millions of retired folks forced to seek extra income, make sure you're aware of the Social Security rules that can affect your benefits if you have outside income. Depending on your age, outside earnings can sharply reduce your current Social Security benefits. However, in a future adjustment, Social Security will later raise your benefits to restore part or perhaps all of what you lose, depending on how long you live.
Here's how it works, according to a Social Security spokeswoman. If you begin receiving Social Security benefits before what's called your "full retirement age" (that's 65 to 67 for most people) Social Security will deduct $1 from your benefit payments for every $2 in outside wage earnings above an annual threshold, which in 2009 is $14,160. In the year you reach the full retirement age, the agency deducts $1 for every $3 you earn but only for the months before the month of your birthday. The earnings threshold, just for those months, is $37,680 in 2009. Once you've reached full retirement age, there is no reduction in Social Security benefits for outside earnings. Also at that time, if you've had your benefits reduced because of outside income, Social Security will raise them beyond what they were when you first began receiving benefits.
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Boomerater™ Report: Switching From Brand Name Products to Generics
Continue reading… 8 CommentsThe Boomerater™ Report is our weekly collaboration with Boomerater. Boomerater is an online resource for Baby Boomers which covers topics such as finding a financial advisor and retirement communities. The site also contains forums in which Boomers can ask questions and exchange first-hand knowledge with each other.
In our weekly report, we post 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 hear from readers who have bought or are considering buying a hybrid car. What are the advantages and disadvantages? Go to Boomerater.com to share your thoughts, and in the next report we will feature some of the best responses.
Last week, we asked readers to tell us about their shopping experiences after switching from brand-name products to generics, and if there were any bargains or cautionary tales they encountered. Here are some responses:
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5 Questions to Test Your Financial IQ
Continue reading… 28 CommentsMassive declines in investments and housing prices have hit Americans with trillions of dollars in losses over the past 18 months. But there's another financial drain lurking below the surface that's costing consumers hundreds of billions dollars more: financial illiteracy.
Much of it has to do with high credit card fees and loan rates. "We find a strong relationship between debt literacy and both financial experiences and debt loads," says Dartmouth economist Annamaria Lusardi, who champions improved consumer education in her current book, Overcoming the Saving Slump. Consumers short on financial know-how tend to make bad decisions that result in higher fees and loan charges, she says in a recent research paper co-authored with Harvard economist Peter Tufano. "We estimate that as much as one-third of the [credit-card] charges and fees paid by less knowledgeable individuals can be attributed to ignorance," she says. "The less knowledgeable also report that their debt loads are excessive or that they are unable to judge their debt position."
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Local Needs Demand Senior Activists
Continue reading… 1 CommentOf all the aging statistics that get tossed around these days, the one that has me quaking is that the population of people aged 65 and older will rise by 36 percent between 2010 (that’s next year, folks) and 2020. This is not a guess. These people have been alive for a long time and their survival rates are well known. However, don’t be surprised when the reality of all these aging people becomes yet another crisis that’s been hiding in plain sight.
Another nearly ironclad number is that people overwhelmingly prefer to stay in their own homes as they get older. The surveys show this preference at nearly 90 percent and it tends not to change much over time. So, while there is always going to be interest in the next new hot retirement spot, most people will retire right where they are, and try to stay there.
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Boomerater™ Report: Obama’s Stimulus Package a Success?
Continue reading… 1 CommentThe Boomerater™ Report is our weekly collaboration with Boomerater. Boomerater is an online advice network for baby boomers, covering everything from finding financial planners to senior housing facilities. The site also contains forums where boomers can ask questions and exchange first-hand experiences with each other.
In our weekly report, we post a Best Life question of the week on Boomerater seeking your advice and tips. This week, we have a shopping question for you: What are the best bargains you’ve found in switching from brand-name products to generics? Any cautionary tales? Go to Boomerater.com to share your thoughts, and in the next report we will feature some of the best responses.
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Population Shifts in the Top 50 Senior Areas
Continue reading… 1 CommentHere's how the nation's top 50 senior areas fared in population growth last year, according to U.S. Census Bureau reports. There are about 940 metropolitan (urban centers with at least 50,000 people) and micropolitan (urban centers with 10,000 to 50,000 people) areas in the country. The top 50 are those with the highest concentrations of households with at least one member age 65 or older.
Nationally, the Bureau said, the country's 363 metro areas contained 254.2 million people—83.6 percent of the total population. Of these areas, 313 gained and 50 lost population between 2007 and 2008. Overall, 397 of the 577 U.S. micro areas gained and 180 lost population between 2007 and 2008.
Nationally, 12.5 percent of U.S. households contained at least one member 65 years of age or older in 2007, the most recent year for the Census Bureau report on household age.
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Seniors Stay Put in Tough Times
Continue reading… 4 CommentsIn 1984, Bruce Springsteen sang about tough times in "My Home Town":
"Now Main Street's whitewashed windows and vacant stores Seems like there ain't nobody wants to come down here no more They're closing down the textile mill across the railroad tracks Foreman says these jobs are going boys and they ain't coming back . . ."
The response then was to leave town and look for a better future someplace else, usually in the South or West. There was always greener grass somewhere in the vast U.S. of A.
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Rental Rates for Retirement Communities
Continue reading… 7 CommentsRental Rates in Independent and Assisted-Living Facilities at the End of 2008
Metropolitan Area Average Monthly One Bedroom Independent Living Unit Rate Year-to-Year Change Average Monthly Studio Assisted Living Unit Rate Year-to-Year Change Atlanta-Sandy Springs-Marietta, GA $2,375 -4.9% $2,941 -2.0% Baltimore-Towson, MD $2,939 3.1% $3,489 -3.0% Boston-Cambridge-Quincy, MA-NH $3,783 4.3% $3,885 2.6% Chicago-Naperville-Joliet, IL-IN-WI $2,731 3.5% $3,774 4.3% Cincinnati-Middletown, OH-KY-IN $2,171 4.6% $2,838 3.8% Cleveland-Elyria-Mentor, OH $2,248 5.5% $3,087 4.2% Dallas-Fort Worth-Arlington, TX $2,125 6.8% $2,894 10.3% Denver-Aurora, CO $2,341 6.1% $3,031 7.0% Detroit-Warren-Livonia, MI $2,093 3.2% $3,263 7.1% Houston-Sugar Land-Baytown, TX $2,343 6.9% $3,214 1.5% Kansas City, MO-KS $2,350 6.2% $3,018 4.0% Las Vegas-Paradise, NV $2,550 10.1% $2,919 16.4% Los Angeles-Long Beach-Santa Ana, CA $3,668 4.4% $2,970 4.5% Miami-Fort Lauderdale-Pompano Beach, FL $2,829 1.5% $2,692 -0.1% Minneapolis-St. Paul-Bloomington, MN-WI $1,484 8.4% $2,904 0.8% New York-Northern New Jersey-Long Island, NY-NJ-PA $4,194 10.0% $3,820 4.7% Orlando-Kissimmee, FL $2,465 3.9% $2,902 -2.4% Philadelphia-Camden-Wilmington, PA-NJ-DE-MD $2,827 1.1% $3,753 1.8% Phoenix-Mesa-Scottsdale, AZ $2,171 1.0% $2,934 4.0% Pittsburgh, PA $2,457 5.9% $2,771 6.6% Portland-Vancouver-Beaverton, OR-WA $2,243 6.4% $2,777 4.6% Riverside-San Bernardino-Ontario, CA $2,585 6.6% $2,788 5.3% Sacramento-Arden-Arcade-Roseville, CA $2,539 2.5% $3,454 4.8% San Antonio, TX $2,178 4.8% $2,671 4.9% San Diego-Carlsbad-San Marcos, CA $3,168 0.4% $3,309 -0.8% San Francisco-Oakland-Fremont, CA $3,302 -2.3% $4,098 1.7% San Jose-Sunnyvale-Santa Clara, CA $2,697 9.7% $3,614 0.7% Seattle-Tacoma-Bellevue, WA $2,791 6.7% $2,788 3.7% St. Louis, MO-IL $2,261 5.8% $3,006 9.1% Tampa-St. Petersburg-Clearwater, FL $2,493 2.5% $2,935 2.9% Washington-Arlington-Alexandria, DC-VA-MD-WV $3,237 0.8% $4,079 6.3%
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The Recession Hits Retirement Communities
Continue reading… 14 CommentsMany older Americans are finding that the economic meltdown has put a big crimp in their plans to move into retirement communities. Aside from cracked nest eggs, falling home prices and weak home-buying demand have also forced many seniors to stay put rather than make the transition. That's because they often pay for retirement-community slots with funds from the sale of their existing homes. Vacancies rose sharply in the nation's retirement communities last year, according to the National Investment Center for the Seniors Housing and Care Industry (NIC). Long waiting lists were once the norm, but no more.
The NIC MAP Data Analysis Service tracks business conditions in retirement facilities in the nation's 31 largest metropolitan areas, and includes only professionally managed, market-rate facilities with at least 25 units. It released data on independent living units, assisted living facilities, and continuing care retirement communities, which include both independent and assisted-living units. Information about nursing homes will be released at a later date, a spokesman said.
